1 BERDROLA a toda vela (1-37)

Transcription

Sustainability Report
2006
Informe de Sostenibilidad
2006
2006 Sustainability Report
NOTICE. This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any
discrepancy between the text of this translation and the text of the original Spanish-language document which this translation is intended to reflect, the text of
the original Spanish-language document shall prevail.
NOTICE
IMPORTANT INFORMATION
This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities or the
solicitation of any vote or approval in any jurisdiction with respect to the proposed offer (the “Offer”) by Iberdrola S.A. (“Iberdrola”) of ScottishPower plc (“ScottishPower”)
ordinary shares, nor shall there be any purchase, sale or exchange of securities or such solicitation in any jurisdiction in which such offer, solicitation or sale or exchange
would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The shares to be issued in connection with the proposed Offer may not be
offered or sold in the United States except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.
If and when Iberdrola commences the Offer for the ordinary shares of ScottishPower and the Offer is implemented by way of a Scheme of Arrangement under the U.K.
Companies Act 1985, as amended (the “Scheme”), any securities of Iberdrola issued to existing ScottishPower shareholders in connection with the Offer will not be
registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), but will be issued in reliance on the exemption provided by Section 3(a)(10) thereof,
and ScottishPower will furnish the Offer document to the SEC under cover of a Form 6-K. Under U.S. securities laws applicable to such circumstances, ScottishPower
shareholders and holders of ScottishPower ADSs who are affiliates of ScottishPower or Iberdrola prior to, or will be affiliates of Iberdrola after, the effective date of the
Offer will be subject to certain U.S. transfer restrictions relating to any Iberdrola shares received in connection with the Scheme.
Loan notes that may be issued in connection with the Offer have not been and will not be registered under the Securities Act or under the relevant securities laws of any
state or territory or other jurisdiction of the United States. Accordingly, loan notes may not be offered or sold in the United States, except in a transaction not subject to,
or in reliance on an exemption from, the registration requirements of the Securities Act and state securities laws.
If and when Iberdrola determines to commence the Offer by way of a takeover offer under The City Code on Takeovers and Mergers of the United Kingdom (the
“Takeover Offer”) rather than the Scheme, Iberdrola will, to the extent that the shares issued in connection with the proposed Takeover Offer are required to be
registered in the United States, file a registration statement on Form F-4, which will include a prospectus, with the United States Securities and Exchange Commission
(“SEC”). Investors are strongly advised to read the documents that will be made available to them, including the registration statement and prospectus, if and
when available, and any other relevant documents made available to them and/or the SEC or other applicable regulatory authorities, as well as any
amendments or supplements to those documents, because they will contain important information regarding Iberdrola, ScottishPower, the Offer and any
Takeover Offer. ScottishPower shareholders should also read the related solicitation/recommendation statement on Schedule 14D-9 that may be filed with the
SEC by ScottishPower relating to the Offer. If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant
documents filed with the SEC, at the SEC’s web site at www.sec.gov and will receive information at an appropriate time on how to obtain these transaction-related
documents for free from the parties involved or a duly appointed agent.
The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document
should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, the companies involved in the proposed Offer disclaim any
responsibility or liability for the violation of such restrictions by any person.
FORWARD-LOOKING STATEMENTS
This communication and other documents relating to the Offer contain forward-looking information and statements about ScottishPower and Iberdrola and their
combined businesses after completion of the proposed Offer and otherwise. Forward-looking statements are statements that are not historical facts. These statements
include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations,
capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words
“expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of ScottishPower and Iberdrola believe that the expectations
reflected in such forward-looking statements are reasonable, investors and holders of ScottishPower and Iberdrola shares are cautioned that forward-looking information
and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of ScottishPower and Iberdrola, that
could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
These risks and uncertainties include those discussed or identified in the public documents sent by ScottishPower and Iberdrola to the Comisión Nacional del Mercado de
Valores and under “Risk Factors” in the annual report on Form 20-F for the year ended March 31, 2006 filed by ScottishPower with the SEC on June 30, 2006.
Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Iberdrola or of ScottishPower. You are cautioned
not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All subsequent oral or written forward-looking statements
attributable to Iberdrola or ScottishPower or any of their respective members, directors, officers, employees or any persons acting on their behalf are expressly qualified in
their entirety by the cautionary statement above. All forward-looking statements included in documents relating to the Offer are based on information available to
Iberdrola on the date thereof. Except as required by applicable law, Iberdrola does not undertake any obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
INFORMATION FROM THE 2007-2009 STRATEGIC PLAN
The information, statements and figures contained in this 2006 Sustainability Report have been taken from the 2007-2009 Strategic Plan, which was approved by the Board of Directors
of IBERDROLA, S.A. on October 3, 2006. The relevant documents in connection therewith were submitted to the National Securities Market Commission (Comisión Nacional del Mercado
de Valores) (CNMV) on October 4. In addition, such Plan was made available to the financial community and the media on October 4, and may be viewed on the Company’s website,
www.iberdrola.com.
Therefore, such Strategic Plan was approved and made public before the Boards of Directors of IBERDROLA and ScottishPower, meeting in Madrid and Glasgow, respectively, adopted a
resolution regarding the terms of ScottishPower’s combination with IBERDROLA, which occurred on November 27, 2006 and was reported to the CNMV on November 28, 2006.
As a result, the information, statements and figures taken from the aforementioned 2007-2009 Strategic Plan and included in this 2006 Sustainability Report may change, because they
do not take into consideration the effect of the possible combination between ScottishPower and IBERDROLA, without IBERDROLA assuming any obligation to update any such
information, statements or figures. Without prejudice to the foregoing, to the extent that this 2006 Sustainability Report contains any forward-looking information, statement or
assertion regarding ScottishPower plc and Iberdrola, S.A. and the combined businesses after completion of the proposed combination, please be advised that such forward-looking
statements are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and
expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words
“expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the management of ScottishPower plc and of Iberdrola, S.A. believes that the expectations
reflected in such forward-looking statements are reasonable, investors and holders of ScottishPower plc shares and of Iberdrola, S.A. shares are cautioned that forward-looking
information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of ScottishPower plc and Iberdrola,
S.A., that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These
risks and uncertainties include those discussed or identified in the public documents sent by ScottishPower plc and Iberdrola, S.A. to the National Securities Market Commission
[Comisión Nacional del Mercado de Valores] and those identified as “Risk Factors” in the Annual Report on Form 20-F for the fiscal year ended March 31, 2006, reported by ScottishPower
plc to the SEC on June 30, 2006. Except as required by applicable law, neither ScottishPower plc nor Iberdrola, S.A. undertake any obligation to update any forward-looking information
or statements."
This 2006 Sustainability Report does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities or the
solicitation of any vote or approval with respect to the proposed acquisition by Iberdrola, S.A. of ScottishPower plc (the “Acquisition”), nor shall there be any purchase,
sale or exchange of securities or such solicitation in any jurisdiction in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or
qualification under the laws of such jurisdiction.
Sustainability Report
2006
4
I take great pleasure in addressing all of you, for the first time in my capacity as Chairman of IBERDROLA, in
order to submit to you the Company’s Sustainability Report for Fiscal Year 2006, which reflects the most
significant aspects of the Company’s business during such period with the utmost rigor and transparency.
The year was one of intense activity, during which IBERDROLA successfully completed its 2001-2006 Strategic
Plan, achieving and indeed mostly surpassing the ambitious goals that were set and maintained unchanged
throughout the period.
In 2001, IBERDROLA formulated a new strategic approach, which differed greatly from the one then followed
by all other European electricity companies. The Plan envisaged a deficit in energy production capacity in
Spain due to growing demand and a lack of investment. Based upon these premises, the Company’s strategy
centered on its core business (the generation, distribution and supply of electricity and gas), guided by a focus
on environmental protection and with a view to enhancing operating efficiency and preserving the
Company’s financial strength.
Thus, over these five years, IBERDROLA has managed to double its installed capacity to 30,400 MW, and has
increased production by a similar proportion, reaching 95,000 GWh in 2006.
In order to reach these goals, it was necessary for the Company to implement an investment program totaling
more than 15,000 million euros to be used for both generation with clean and efficient technologies
(combined cycle plants and renewable energy) and distribution infrastructure, in order to continue improving
the quality of service that IBERDROLA provides to approximately 18.5 million customers all over the world.
Thanks to this extensive investment program, and to the commitment, professionalism and efforts of
IBERDROLA’s workforce in carrying it out, the Company doubled its size and income during this period,
creating more than 20,000 million euros in value and more than 4,000 million euros in shareholder
remuneration, making it the leading European utility in terms of Total Shareholder Return (TSR), which came
to 179% over the 2001-2006 period.
Net Profit for Fiscal Year 2006 amounted to 1,660.3 million euros (up 20% from 2005), exceeding the target
established in the Strategic Plan.
The Group’s production increased 10.8% as compared to 2005, and especially noteworthy in this regard is
production with emissions-free technology, which increased by 18%. As a result, IBERDROLA has become one
of the energy companies with the lowest specific emissions of the sector in Spain, which are one-half of the
average figure for the other companies.
5
These results have enabled the Board of Directors of the Company to propose to the shareholders at the
General Shareholders’ Meeting a total dividend of 1.04 euros per share for Fiscal Year 2006, which, added to
an attendance bonus of 0.02 euro per share, brings total remuneration to 1.06 euros per share, a higher figure
than that established in the Plan itself.
IBERDROLA’s objective for the future is to continue creating value for all its shareholders. Consequently, in
October 2006, the new 2007-2009 Strategic Plan was launched following approval by the Company’s Board of
Directors. This Plan seeks to continue down the successful path followed by the Company in recent years, with
growth, internationalization and efficiency as its mainstays and profitability as its ultimate goal. Thus, the
strategy adopted in the previous Plan is maintained, focusing on the energy business and clean energy within
a framework of greater market deregulation.
Along these lines, the 2007-2009 Strategic Plan contemplates growth that is both organic (with estimated
investments of 9,000 million euros) and non-organic, through corporate non-dilutive transactions allowing for
it to maintain a solid financial position.
In this regard, the agreement reached between IBERDROLA and ScottishPower in November 2006 to combine
the two companies satisfies these requirements. We expect this transaction, one of the largest combinations
in Spanish corporate history and valued at 17,100 million euros, will permit early achievement of the
operating and financial objectives formulated in the Plan, as well as to expand the size of the Company, while
simultaneously generating more value for all shareholders.
Furthermore, it will entail a significant qualitative leap in IBERDROLA’s century-old history, turning the
Company into one of the premier performers on the international energy front and reinforcing its position as
a world leader in renewable energy.
I would like to highlight that this new 2007-2009 Plan carries with it a strengthening of IBERDROLA’s
commitment not only to its shareholders and customers but also to the people working at IBERDROLA and to
society as a whole.
It is a commitment to people, because this is a plan prepared by and intended for people, providing for a
myriad of opportunities for the Company’s workforce to develop and exploit all of its potential while the
Company does so as well; and it is also a commitment to society and its environment, through stepped-up
social activities, a decisive focus on technological innovation, and an improvement in competitiveness and the
corporate fabric in the territories served by the Company.
6
EL PLAN ESTRÁTEGICO 2002-2006
Finally, I would like to emphasize that Corporate Governance, as well as transparency and business ethics, are
a constant priority for IBERDROLA. This point is framed by the amendment of the regulations for the
Company’s Board of Directors and the Committees thereof, as well as proposed resolutions being submitted
to the shareholders at the General Shareholders’ Meeting to amend the By-Laws and the regulations for the
General Shareholders’ Meeting in order to adjust the content thereof to the most significant
recommendations of the Uniform Good Governance Code. IBERDROLA thereby continues to act in advance of
the adjustments required by the regulators and dedicate all of its efforts to ensuring compliance with best
practices in the management of the Company, always in line with the traditions and history of this House.
Facing the future, IBERDROLA will continue working in pursuit of a larger, more efficient, more profitable and
stronger Company, which will allow for the ongoing creation of value for our shareholders and, at the same
time, for an increasingly responsible, sustainable and committed Company of which all of us can feel proud
and that is a most precious legacy for future generations.
Ignacio S. Galán
Chairman & CEO
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TABLE OF CONTENTS
Page
Iberdrola, at full sail
Profile: The IBERDROLA Group
Transparency: Corporate Governance
A Company that is forward-looking
Planning ahead: The 2001-2006 Strategic Plan
Internationalization: The 2007-2009 Strategic Plan
Growth: The Iberdrola-Scottish Power combination agreement
A Company that is larger
Context: The energy sector
Profitability: Economic/financial information and the stock market
Strength: The deregulated business
Quality: The regulated business
Nature: The renewable energy business
Expansion: Latin America and non-energy businesses
A Company that is responsible
Commitment to sustainable development: Vision and values
Commitment to the environment: Environmental information
Commitment to persons: Social information
Commitment to innovation: R&D&i information
Commitment to excellence: Quality information
Exhibits
Key features of the Sustainability Report
Supplemental information
The Sustainability Report according to Rule AA1000 and the GRI guidelines
External auditor’s certification
10
12
26
38
40
44
50
54
56
60
72
78
82
86
94
96
106
138
180
184
188
189
192
216
224
9
Iberdrola, at full sail
Five years of success, with a commitment to value creation and
sustainability
The last five years in the development of IBERDROLA provide a good example of commitment to the
creation of value and to sustainable development in the energy sector; an excellent business case of
forward-looking actions and response to environmental and social needs and concerns, which have
positioned IBERDROLA as one of the leading electric companies in the world.
Five years of strategic success, during which IBERDROLA has been able to show how it is possible to
commit to and meet the ambitious challenge of doubling the Company’s size with a simple, effective
formula: a clear vision, confidence in its own capabilities, developed and enhanced throughout the
Company’s century-old history, and the utmost degree of responsibility, devotion and dedication to
the accomplishment of its objectives.
A formula that has shown the course to many, both in Spain and abroad, and justifies the highest
expectations for IBERDROLA in view of the energy challenges posed by the 21st century within and
outside of Europe. A formula that has made us a world leader in the area of renewable energy and
cleaner and more efficient energy sources.
In recent years, IBERDROLA has made an unprecedented investment effort in the industry, resulting
in the Company’s position as one of the most important developers of gas combined cycle plants in
the world, the world leader in wind power and the largest private power producer in Mexico. This is
the result of our commitment to the development of the communities where we have a presence.
Our Company has focused on achieving outstanding service quality for approximately 18.5 million
customers all over the world through constant development and improvement of our energy
infrastructure. Our daily commitment is to come closer to our customers, offering them best-in-class
services and an optimal response to their needs.
Sustainable Returns
Our commitment to the achievement of the goals defined in our Strategic Plan and the ongoing
improvements in efficiency has turned us into one of the electricity companies that has created the
most value for its shareholders. Sustaining the highest total return for our investors is the incentive
for constant improvement.
The adoption of the best governance and management practices, along with our unwavering
determination to use the best energy resources, has enabled the Company to gain a presence in the
principal world indices of sustainability and responsibility. This is an unequivocal sign of the
confidence placed in IBERDROLA by the most rigorous analysts and observers in the energy industry.
IBERDROLA’s achievements are the best example of the stamina of the present-day Spanish company,
well-positioned to face the strongest international energy challenges while contributing to the
protection of our natural environment, quality of life and the creation of wealth for the community.
These commitments are spelled out with renewed vigor in IBERDROLA’s new 2007-2009 Strategic
Plan, which, thanks to increased internationalization, growing investments in clean and renewable
energy, enhanced efficiency and, ultimately, greater returns, will confirm our Company’s position as
an outstanding operator in the “Champions League” of the single European energy market.
IBERDROLA is today a youthful, modern 100-year old Company that has earned itself an enviable
place from which to confidently face the future and to decisively and competently undertake the
ambitious projects for growth that will guarantee the greatest sustainable returns for the various
groups with ties to our Company.
11
Profile
More than 100 years of experience and
investment in excess of 15,000 million
euros over the last five years have made
IBERDROLA one of the leading private
energy groups in the world, with a presence
in almost 40 countries. With assets of more
than 33,000 million euros and profits of
1,660 million euros in 2006, the IBERDROLA
Group has a generation capacity of
30,400 MW and supplies energy to almost
18.5 million customers, with best-in-class
service quality and at one of the lowest
greenhouse gas emission rates in Europe.
All this is possible thanks to the efforts and
dedication of a workforce consisting of
more than 16,000 people.
THE IBERDROLA GROUP
Presence of the IBERDROLA Group in the world
Key Performance Indicators
Environmental, Social, Quality and R&D&Innovation Aspects
PRESENCE OF THE IBERDROLA GROUP IN THE WORLD
Switzerland
Germany
Slovakia
Ukraine
Latvia
Russia
Sweden
Belgium
Poland
United Kingdom
Finland
Estonia
Kazakhstan
India
U.S.A.
United Arab Emirates
Qatar
Portugal
Mexico
Guatemala
Spain
Armenia
Hungary
Cyprus
Italy
Venezuela
Chile
Brazil
Bolivia
Kenya
France
China
Bulgaria
Tunisia
Greece
Algeria
Albania
Taiwan
Activities**
Corporate Headquarters
Electricity Generation
Gas Supply*
Subsidiaries
Electricity Distribution
Ongoing Engineering Projects
Branches
Electricity Supply*
Other Activities**
(*) IBERDROLA engages in energy trading in: Spain, Portugal, France, Switzerland, Germany, Austria, Belgium,
Holland and Italy, and also engages in gas trading in Europe and Asia.
(**) Additional information available in the following chapters: Deregulated Business, Renewable Energy
Business, Latin America, Iberdrola Ingeniería, Iberdrola Inmobiliaria and Supplemental Information.
13
IBERDROLA is one of the world’s leading
approximately 40 countries
largest wind energy producer in the world, with 4,100+ MW; one of the
leading international developers, of combined cycles, with approximately 10,000 MW
under management; the lowest-emission generator in Spain, and one of the
most environmentally-respectful in Europe: 247 grams of CO2 per kWh
in 2006
… it is the
With e33,000+ million in assets, and a double-digit increase in results:
Net profit up
20.1%
EBITDA up
152%
EBIT up
17.3%
Economic/financial information (e millions) 2006
(EBITDA)
3,890
(EBIT)
2,655
Net profit
1,660
Total assets
33,061
Investments
2,899
- Spain
1,853
- International
1,046
Net profit (e millions)
+20.1%
1,660
1,382
2005
2006
It is a world leader
(Best in Class 2006) for its social and environmental
performance, and continues to strengthen its commitment to:
customers: 600,000+ new supply points managed throughout the world
680+ million euros invested in distribution
in Spain and Latin America
increased quality of service
(In Spain, ICEIT is less than 2 hours/year, and in
Latin America, quality has improved 52% since the privatization of the companies)
increase in new facilities:3,200+ new transformer centers
3,400+ kilometers of new lines in Spain ...
... its environment: 975+ million euros of investment in more
environmentally-respectful technologies
increased presence on the main sustainability indices:
Global 100 Most Sustainable Corporations in the World, Dow Jones Sustainability
World Index, Storebrand Investments, Climate Leadership Index ...
private energy groups with a presence in
and on four continents …
Distributes 127,000+ million kWh to approximately 18.5 million users
in Spain and Latin America
Operational data
Gross production (kWh million):
- Spain
- Latin America
Installed capacity (MW):
2006
95,102
71,459
23,643
30,384
Creates value for its 300,000+ shareholders:
Total shareholder return up
Share value up
Dividend up
47.3%
43.4%
20.1%
Change in dividend (e)
Stock exchange data
2006
Market capitalization (e millions) 29,859
Dividend yield (%)
3.8%
Earnings per share (e)
1.84
+20.1%
1.063*
0.885
2005
2006
(*) Pending approval at the General Shareholders’ Meeting
pursuant to a proposed allocation of profits. Includes a e0.02
attendance bonus.
... a company expanding its activities:
e 73+ million in social development activities in Spain and Latin America
e 56+ million invested in R&D&i (up 4%) in Spain
e 4,200+ million in purchases (up 18%) in Spain
e 1,800+ million in tax contributions in Spain
... and the 16,000+ people who work at IBERDROLA:
980+ new hires (up 14%)
660,000+ hours of training (up 9%)
88.7%+ of personnel have received training
improved employment quality: 99.6%+ full-time jobs and
91.5%+ permanent contracts
KEY PERFORMANCE INDICATORS
Economic/financial data (1)
E millions
Income statement
Net Sales
Gross operating income (EBITDA)
Net operating income (EBIT)
Profit before taxes
Net profit
2006
11,017
3,890
2,655
2,386
1,660
2005
11,738
3,378
2,262
1,958
1,382
% change 06/05
-6.1
+15.2
+17.3
+21.9
+20.1
E millions
Balance sheet
Total assets
Shareholders’ equity
Net financial debt*
Return on equity (ROE)
Financial leverage (net debt/net debt+shareholders’ equity)**
2006
33,061
10,567
13,119
16.6%
55.4%
2005
30,479
9,415
12,211
15.4%
56.5%
% change 06/05
+8.5
+12.2
+7.4
+120 b.p.
-110 b.p.
(*) Includes amounts corresponding to the tariff shortfall: E 1,341 million as of December 2005 and E 572 million for 2006.
(**) Net debt / net debt+shareholders’ equity. Includes the financing of the tariff shortfall. If not included, leverage would be 53.6% as of 2005 and 54.3% as of
December 2006.
Gross operating income (EBITDA)
Net operating income (EBIT)
(E millions)
(E millions)
+15.2%
3,890
3,378
+17.3%
2,655
2,262
2005
2006
(1) Consolidated information for Grupo IBERDROLA, S.A.
16
2005
2006
THE IBERDROLA GROUP
Profit before taxes
Net profit
(E millions)
(E millions)
+21.9 %
2,386
1,958
+20.1%
1,660
1,382
2005
2006
2005
Total assets
(E millions)
(E millions)
+8.5%
2006
33,061
+12.2%
30,479
10,567
9,415
2005
2006
2005
Return on equity (ROE)
Financial leverage*
(%)
(%)
2006
56.5%
55.4%
+120 b.p.
15.4%
Without tariff shortfall
16.6%
53.6%
2005
2006
2005
54.3%
2006
(*) Net debt/net debt+shareholders’ equity. Includes financing of the tariff
shortfall. If not included, leverage would be 53.6% as of December 2005 and
54.3% as of December 2006.
17
OPERATING DATA
IBERDROLA Group
Gross production (GWh)
Gas combined cycle
Wind and mini-hydroelectric
Hydroelectric
Nuclear
Fuel-oil
Coal
Cogeneration (attributable)
Installed capacity (MW)
Gas combined cycle
Wind and mini-hydroelectric
Hydroelectric
Nuclear
Fuel-oil
Coal
Distributed energy (GWh)
Users / supply points under management (millions)
IBERDROLA employees (no.)*
2006
95,102
37,053
7,867
13,250
26,354
2,081
5,430
3,067
30,384
8,818
4,434
9,149
3,344
2,889
1,253
497
127,182
18.4
16,155
2005
85,676
31,998
7,058
8,890
24,247
3,596
7,394
2,493
27,791
6,897
3,810
9,118
3,344
2,889
1,253
480
122,904
17.8
17,184
% change 06/05
+11.0
+15.8
+11.4
+48.2
+8.7
-42.1
-26.6
+23.0
+9.3
+27.9
+16.4
+0.3
+3.5
+3.5
+3.4
-6.0
Note: Installed capacity, production and number of employees on a consolidated basis.
(*) Decrease is due to the sale of the companies Azertia and Landata, belonging to Corporación IBV - which is 50%-owned by each of IBERDROLA and BBVA-.
IBERDROLA Group gross production
IBERDROLA Group installed capacity
(%)
(%)
Nuclear: 27.8%
Coal: 5.7%
Fuel-oil: 2.1%
Cogeneration: 3.2%
Hydroelectric: 30.1%
Wind and mini-hydro: 14.6%
Combined cycles: 29.0%
Cogeneration: 1.7%
Wind and mini-hydro: 8.2%
18
Fuel-oil: 9.5%
Coal: 4.1%
Nuclear: 11.0%
THE IBERDROLA GROUP
Spain
Gas combined cycle
Wind and mini-hydroelectric (1)
Hydroelectric
Nuclear
Fuel-oil
Coal
Gas combined cycle
Wind and mini-hydroelectric (1)
Hydroelectric
Nuclear
Fuel-oil
Coal
Distributed energy (GWh)
Regulated market
Supply
Gas supply (GWh)
Users / supply points
Gas combined cycle
Users / supply points (millions)
2006
71,459
15,172
7,867
11,971
26,354
2,081
5,430
2,584
25,966
4,800
4,434
8,842
3,344
2,889
1,253
404
99,520
81,834
17,686
46,570
14,529
32,041
9.9
2005
66,249
14,124
7,058
7,731
24,247
3,596
7,394
2,099
24,502
4,000
3,810
8,819
3,344
2,889
1,253
387
96,320
57,872
38,448
51,985
22,255
29,730
9.7
% change 06/05
+7.8
+7.4
+11.5
+54.9
+8.7
-42.1
-26.6
+23.1
+6.0
+20.0
+16.4
+0.3
+4.4
+3.3
+41.4
-54.0
-10.4
-34.7
+7.8
+2.1
(1) On the international level: 440 MW of capacity and 705 GWh of production in 2006.
IBERDROLA gross production in Spain
IBERDROLA installed capacity in Spain
(%)
(%)
Nuclear: 36.9%
Coal: 7.6%
Fuel-oil: 2.9%
Wind and mini-hydro*: 17.0%
Cogeneration: 3.6%
Cogeneration: 1.6%
Wind and mini-hydro*: 11.0%
Fuel-oil: 11.2%
Coal: 4.8%
Nuclear: 12.9%
(*)
Spain: 10.2% (7,162 GWh, domestic and 750 GWh, international).
(*)
Spain: 15.6% (3,994 MW, domestic and 440 MW, international).
19
Latin America
Production (attributable to IBERDROLA) (GWh)
Gas combined cycle
Hydroelectric
Cogeneración
Installed capacity (attributable to IBERDROLA) (MW)
Gas combined cycle
Hydroelectric
Cogeneration
Distributed energy under management (GWh)
Users / supply points under management (millions)
Gross production attributable to IBERDROLA in
Latin America
(%)
Combined cycle: 92.6%
Hydroelectric: 5.4%
Cogeneration: 2.0%
20
2006
23,643
21,881
1,279
483
4,418
4,018
307
93
27,662
8.5
2005
19,427
17,874
1,159
394
3,289
2,897
299
93
26,609
8.1
% change 06/05
+21.7
+22.4
+10.4
+22.6
+34.3
+38.7
+2.7
+4.0
+4.9
Installed capacity attributable to IBERDROLA in
Latin America
(%)
Combined cycle: 91.0%
Cogeneration: 2.0%
Hydroelectric: 7.0%
THE IBERDROLA GROUP
IBERDROLA AND THE STOCK MARKET*
IBERDROLA compared to the Ibex-35, Euro-Stoxx 50 and Euro-Stoxx Utilities indexes
(%)
(Base 100: 12-30-2005)
300
280
260
240
220
200
+43.44%
180
Euro -Stoxx Utilities:+35.07%
160
140
Ibex-35:+31.80%
120
Euro-Stoxx 50: +15.12%
100
80
60
40
December-05
April-06
August -06
December-06
Stock market data
Market capitalization (12/31) (E millions)
Earnings per share (E)
Net operating cash flow per share (E)
P.E.R (Closing price/Earnings per share) (multiple)
Price / Book Value (Market capitalization over net book value at 12/31) (multiple)
2006
29,859
1.84
2.93
18.00
2.83
2005
20,817
1.53
2.60
15.19
2.21
2006
901,549,181
33.12
29.42
7,656,923
107,438,017
1,365,238
0.89
0.37
0.52
3.8%
2005
901,549,181
23.09
20.97
6,828,563
57,939,060
917,108
0.77
0.33
0.44
4.1%
IBERDROLA’s Shares
Number of outstanding shares
Closing price for the period (E)
Average price for the period (E)
Average daily volume (shares)
Highest volume (September 27, 2006/June 29, 2005)
Lowest volume (August 21, 2006/Augues 15, 2005)
Dividends paid (E)
Interim (January 2, 2006/January 3, 2005)
Supplemental (July 3, 2006/July 1, 2005)
Dividend yield (yearly dividend paid/closing price for previous year)
(*) Additional information in the chapter on stock market (page 68).
21
IBERDROLA’S ENVIRONMENTAL ASPECTS
Emissions*
CO2 -specific emissions- thermal mix
SO2 -specific emissions- thermal mix
(grams/kWh)
(grams/kWh)
592
1.9%
1.95
581
12.8%
1.70
2005
2006
2005
2006
Specific particulate emissions - thermal mix
NOx -specific emissions- thermal mix
(grams/kWh)
(grams/kWh)
1.71
0.14
14.3%
17.5%
0.12
1.41
2005
2006
Gross exempt production of CO2 in Spain**
(%)
65%
2005
Environmental Sustainability
(Points/Ranking)
Dow Jones Sustainability
World Index
Storebrand Investments
Climate Leadership Index
Other
(**) Production and emissions from IBERDROLA power stations and production
and emissions corresponding to the Company's percentage interest in
cogeneration, combined cycle and nuclear power stations.
2006
Global 100 Most Sustainable
Corporations in the World
Pacific Sustainability Index
77 points -3 points from the leader
-in the Worldwide Utilities category.
Best in class. Second place in the
Electric Utilities category for
environmental behavior.
Best in class at the global level in 2006.
Among the 50 best companies in the
world in climate strategy, after
participating in the Carbon Disclosure
Project.
Among the 200 most sustainable
companies in the world, according to this
index prepared by Corporate Knights and
by the sustainability research company
Innovest Strategic Value Advisors.
Leadership group: among the top 3
companies in the Energy & Utilities
Sector category.
(*) Figures correspond to the sum of the emissions values from combined cycle and conventional thermal plants directly managed by IBERDROLA (100%-owned by the
Company) divided by the total production of these plants.
These figures are different than those corresponding to the specific emissions from the global mix, which are the sum of absolute emissions in Spain divided by all
production from generation facilities in Spain. The data for CO2 -specific emissions from the global mix in Spain is 211 g/kWh, including IBERDROLA’s generation
facilities and the percentage attributable to the facilities in which it has an interest.
22
THE IBERDROLA GROUP
IBERDROLA’S SOCIAL ASPECTS
New hires
Hours of training
(no. of persons)
(hours)
660,470
988
+9.3%
+13.6%
604,168
870
2005
2006
2005
Attendance at training courses
Purchasing volume*
(no. of attendees)
(E millions)
2006
54,238
+13.7%
+18%
4,283
47,698
3,629
2005
2006
2005
2006
(*) Purchases in Spain
Website: press
Accident frequency rate*
(no. of visits)
13
11
147,638
9
+55%
7
95,348
Annual rate
200
0
200
1
200
2
200
3
200
4
200
5
200
6
199
8
199
9
199
6
199
7
199
1
199
2
199
3
199
4
199
5
5
Trend line
(*) Frequency rate = Number of accidents with sick leave per million hours worked.
2005
2006
23
IBERDROLA’S QUALITY AND R&D&i ASPECTS
ISO 9001 certifications (no.)
ISO 14001 and EMAS certifications (no.)
Quality Management System
Environmental Management System
+21%
+26%
24
24
2006
2005
29
19
2005
OHSAS 18001 certifications (no.)
2006
Total number of certifications (no.)
Occupational Risk Prevention System
+23%
59
48
+20%
6
5
2005
24
2006
2005
2006
THE IBERDROLA GROUP
Demand and quality of service in Spain during 2006
+3.3%
ICEIT*
less than 2
hours/year
1.96
hours/year
Demand
(*)
Quality of service
Supplied area:
Population supplied:
No. of Autonomous Communities:
No. of provinces:
Users:
190,000 km2
16.5 million persons
14
32
9.9 million
Installed Capacity Equivalent Interrupt Time.
Investment in R&D&i**
(E millions)
+4%
56
54
2005
2006
(**) Research, development and innovation.
25
Transparency
We have focused on our commitment to the best
practices of corporate governance and transparency as
the basis upon which to build the confidence of the
various groups to which IBERDROLA is related. Our
shareholders, customers, suppliers and employees, as
well as the media and society in general, increasingly
demand truthful, transparent and periodic information
regarding the Company’s performance and prospects,
as well as the application of good governance codes.
The development of the 2001-2006 Strategic Plan has
led to the implementation of a general risk policy
aimed at identifying, measuring and managing all of
our risks in the environmental, social and economic
areas, such that enhanced guarantees may be given to
those groups. Our performance in this area has been
given international recognition by means of the
inclusion of the Company in the prestigious FTSE
Corporate Governance Index (CGI). We have thus
demonstrated that the best Company is the one that
acts most transparently toward the various groups
with which it is related.
CORPORATE GOVERNANCE WITHIN THE FRAMEWORK OF SUSTAINABILITY*
The Company’s Corporate Governance model
Ownership structure
Board structure
THE COMPANY’S CORPORATE GOVERNANCE MODEL
The Company’s Corporate Governance model is described in
detail in the 2006 Annual Corporate Governance Report,
prepared in accordance with the provisions of Circular
1/2004, of March 17, of the National Securities Market
Commission (Comisión Nacional del Mercado de Valores)
(CNMV) and available on the Company’s website,
www.iberdrola.com.
Management structure
Risk control and management
As shares are represented by book entries, the interest
held by each shareholder in the share capital cannot be
precisely ascertained.
Below is a comparative breakdown of the interests held by
the Company’s significant shareholders as of December
31, 2006 and as of December 31, 2005:
TABLE 1
For purposes of this 2006 Sustainability Report, this chapter
presents a description of those aspects of IBERDROLA’s
Corporate Governance model that contribute to better
governance at the Company and, therefore, to the
implementation of the Company’s global strategy of
sustainable development, especially taking into account the
recommendations of the Global Reporting Initiative (GRI).
The Board of Directors has proposed to the shareholders
acting at the General Shareholders’ Meeting a number of
amendments to the By-Laws and the Regulations for the
General Shareholders’ Meeting in order to adjust the
provisions thereof to the Uniform Good Governance Code
(Código Unificado de Buen Gobierno) approved by the CNMV
on May 22, 2006 and to include several technical
improvements as well.
For the same purpose, the Board of Directors resolved, at its
meeting of February 20, 2007 to amend its own Regulations,
the Regulations for Conduct in Securities Markets and the
Regulations of the Nominating and Compensation
Committee, as well as to ratify an amendment to the
Regulations of the Audit and Compliance Committee
approved by such Committee at its February 14, 2007
meeting, all of which changes are contingent upon the
approval of the amendments to the By-Laws and the
Regulations for the General Shareholders' Meeting proposed
to the shareholders at the aforementioned General
Shareholders’ Meeting.
OWNERSHIP STRUCTURE
As of the date of publication of this Report, the share
capital of IBERDROLA, S.A. comes to 2,704,647,543 euros.
Such capital is divided into 901,549,181 shares.
Significant Shareholders**
ACS, Actividades de
Construcción y Servicios, S.A.
Bilbao Bizkaia Kutxa (BBK)
Banco Bilbao Vizcaya Argentaria, S.A.(BBVA)
2006
2005
10.00%
9.966%
7.492%
7.502%
5.419%
Chart 1 shows the approximate distribution of
shareholdings by type of shareholder:
CHART 1
Shareholdings by type of shareholder**
(%)
Retail investors: 27%
Foreign institutional investors: 27%
Domestic institutional investors: 46%
The principal ordinary channel of communication
between the shareholders and the Board of Directors
is the General Shareholders’ Meeting. In addition, the
Office of the Shareholder (Oficina del Accionista) is at
all times available to respond to shareholders’
concerns.
(*) Additional information may be found in IBERDROLA’s 2006 Annual Corporate Governance Report and on the website: http://www.iberdrola.es/wcorp/corporativa/iberdrola?IDPAG
(**) As shares are represented by book entries, shareholders’ interests in the share capital cannot be precisely ascertained. The sources of the information provided are
our shareholders’ annual reports, notices sent to the National Securities Market Commission (CNMV) and to the Company, as well as various press releases.
27
The Company is available to the shareholders for this
purpose via a personal service center at its registered
office, a toll-free line (34 900 10 00 19), the e-mail address
[email protected] and the website
www.iberdrola.com. Sections E.3. and E.4. of the 2006
Annual Corporate Governance Report and the
Shareholder’s Guide, which may be viewed on the website,
provide a detailed description of shareholders’ rights to
receive information and to attend and be represented at
the General Shareholders’ Meeting, as well as of the
measures adopted by the Company in order to encourage
their participation therein.
Board of Directors
As of December 31, 2006, the Board of Directors consisted
of 15 Directors.
The detailed information provided below also includes the
Honorary Chairmen of the Company, the Secretary and
Legal Counsel to the Board and the Vice-Secretary of the
Board (see table 2).
As provided by Article 27 of its Regulations, the Board of
Directors meets with the frequency it deems appropriate,
but at least once a month. During fiscal year 2006, it held
13 meetings.
BOARD STRUCTURE
As provided by Article 32 of the By-Laws, “Management of
the Company is vested in a Board of Directors, its Chairman,
an Executive Committee, called the Executive Committee
and, if any and if agreed to by the Board of Directors, a
Chief Executive Officer.”
Section B.1.14. of the 2006 Annual Corporate Governance
Report contains a detailed description of the procedures
for appointment, re-election, evaluation and removal of
Directors.
TABLE 2
Board of Directors
Honorary Chairmen
Position on the Board
Chairman & CEO
Vice-Chairman
Vice-Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Secretary and Legal Counsel
Vice-Secretary & General Secretary
Mr. Manuel Gómez de Pablos González
Mr. Iñigo de Oriol e Ybarra
Director
Mr. José Ignacio Sánchez Galán
Mr. Juan Luis Arregui Ciarsolo
Mr. Víctor de Urrutia Vallejo
Mr. José Orbegozo Arroyo
Mr. Lucas María de Oriol López-Montenegro
Mr. Ricardo Álvarez Isasi
Mr. Mariano de Ybarra y Zubiría
Mr. José Ignacio Berroeta Echevarría
Mr. Julio de Miguel Aynat
Mr. Sebastián Battaner Arias
Mr. Xabier de Irala Estévez
Mr. Iñigo Víctor de Oriol Ibarra
Ms. Inés Macho Stadler
Mr. Braulio Medel Cámara
Mr. José Carlos Pla Royo
Mr. Federico San Sebastián Flechoso
Mr. Julián Martínez-Simancas Sánchez
(1) The Director Mr. Xabier de Irala Estévez was appointed at the proposal of Bilbao Bizkaia Kutxa (BBK).
(2) The Director Mr. José Carlos Pla Royo was appointed at the proposal of Banco Bilbao Vizcaya Argentaria, S.A. (BBVA).
28
Type
Executive
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Proprietary(1)
External-Other
Independent
Independent
Proprietary(2)
CORPORATE GOVERNANCE WITHIN THE FRAMEWORK OF SUSTAINABILITY
Profile of the Directors
Mr. JOSÉ IGNACIO SÁNCHEZ GALÁN (Salamanca, 1950)
Industrial Engineer from Escuela Superior Industrial ICAI
of Universidad Pontificia de Comillas (Madrid). He holds a
Degree in Business Administration and Foreign Trade from
ICADE at Universidad Pontificia de Comillas (Madrid) and a
Degree in Business Administration and Foreign Trade from
the Escuela de Organización Industrial (EOI) of Madrid.
He has held several management positions at Sociedad
Española del Acumulador Tudor, S.A. (now Grupo Exide).
Also, he has been Director/General Manager of Industria
de Turbo Propulsores, S.A. (ITP), Chairman of the German
consortium Eurojet, Chief Executive Officer of Airtel Móvil
(now Vodafone España) and a member of the Supervisory
Board of Nutreco Holding N.V.
At present, he is Chairman & Chief Executive Officer of
IBERDROLA, S.A. and Chairman of Iberdrola Inmobiliaria, S.A.
and of El Desafío Español, the company that manages the
participation of the Spanish yacht in the America’s Cup. He is
also a Director of Page Ibérica and of Bodegas Matarromera.
He is a member of the Board of Trustees at the following
institutions, among others: Fundación Príncipe de Asturias,
Fundación Cotec, Fundación Carolina, Fundación Museo
Guggenheim de Bilbao, Fundación Universitaria ComillasICAI, Fundación Universidad Pontificia de Salamanca,
Fundación General Universidad de Salamanca and
Fundación Consejo España-Estados Unidos, and serves on
the Advisory Committee for the Prince of Asturias
Endowed Chair of Information Science and Technology of
the University of New Mexico (United States of America).
He is a member of the Círculo de Empresarios Vascos, the
Círculo de Empresarios (Madrid), the Círculo de Economía,
and the Asociación para el Progreso de la Dirección (APD),
as well as of the American Management Association. In
addition, he has been a professor at the School of
Industrial Engineers at ICAI. He has a fluent command of
English, French and Italian.
Mr. JUAN LUIS ARREGUI CIARSOLO (Mallavia,
Vizcaya, 1943)
Technical Engineer graduated from the Escuela de
Bilbao. Holds a Degree in Numerical Control from
Wandsdorf and a Masters’ Degree in Micro-Mechanical
Engineering from Besançon.
He is Chairman of Grupo Empresarial ENCE, S.A., Viña
Izadi, S.A., Foresta Capital, S.A. and Retos Operativos XXI, S.L.,
and has participated in the foundation of these last
three companies. He is also Vice-Chairman of
IBERDROLA, S.A., as well as a Director of Gamesa
Corporación Tecnológica, S.A.
He has served as Chairman of Gamesa and of Corporación
Eólica CESA, S.A., of which companies he was founder, and
as Co-Chairman of Grupo Guascor.
Mr. VÍCTOR DE URRUTIA VALLEJO (Madrid, 1942)
Doctor in Economics from Universidad Complutense de
Madrid and holder of a Law Degree.
He is Chairman of Compañía Castellana de Bebidas
Gaseosas, S.A. (CASBEGA) and of Compañía Vinícola del
Norte de España, S.A. (CVNE), Vice-Chairman of
IBERDROLA, S.A., as well as a Director of Barclays Bank, S.A.,
Vocento, S.A., Norte de Castilla, S.A. and Viñedos del
Contino.
He has served as Chairman of Begano, S.A. and as a
Director of Corporación IBV, of IBM España, of Babcock
Wilcox, S.A. and of Bridgestone Firestone Hispania, S.A.
Mr. JOSÉ ORBEGOZO ARROYO (Getxo, Vizcaya, 1939)
Doctor in Industrial Engineering from the Escuela TécnicaSuperior de Ingenieros Industriales de Madrid.
He is a Trustee of Fundación Iberdrola. He has held
management positions in a number of companies and has
been General Director of Worsa as well as Vice-Chairman
& CEO of Vazman and Medex, S.A. In addition, he has
been a member of the Board of Directors of Naviera Galea,
S.A., Indumetal, S.A., Corporación IBV and other
construction, metal, naval and food companies.
Mr. LUCAS MARÍA DE ORIOL LÓPEZ-MONTENEGRO
(Madrid, 1941)
Doctor in Industrial Engineering from the Escuela
Técnica-Superior de Ingenieros Industriales de Madrid
and Graduate of the Executive Corporate Management
Program at IESE.
He has been a Director at Valca, S.A., Vidrala, S.A. and
Crisnova, S.A.
29
Mr. RICARDO ÁLVAREZ ISASI (Bilbao, 1940)
Mr. JULIO DE MIGUEL AYNAT (Valencia, 1944)
Doctor in Industrial Engineering from Escuela TécnicaSuperior de Ingenieros Industriales de Bilbao and
Professor of Electrical Engineering with a broad academic
and research background.
Degree in Law from Universidad de Valencia.
He is a Director at a number of companies and a member
of the Board of Trustees of a number of Foundations, such
as Fundación Iberdrola, Fundación Escuela de Ingenieros
de Bilbao and Fundación Víctor Tapia-Dolores Sáinz, of
which he is the chief executive.
He has been Director of the Dyna technical magazine and
has held a number of positions in academic and research
institutions, such as Director of the Escuela de Ingenieros
de Bilbao and a member of the Steering Committee and
the Social Board of the Universidad del País Vasco.
He has been a member of the Board of Directors of
CADEM (a Basque Public-Sector Company), of Ente Vasco
de la Energía (EVE) and of Iberduero, S.A., as well as
executive General Secretary of LABEIN.
Mr. MARIANO DE YBARRA Y ZUBIRÍA (Getxo,
Vizcaya, 1947)
He is a Director of Corporación de Medios de
Extremadura, S.A.
He has held a number of management positions in
companies such as Manufacturas Industriales, S.A., Ybarra
Soroa y Cía., Ltda. and Naviera García-Miñaur, S.A.
Mr. JOSÉ IGNACIO BERROETA ECHEVARRÍA (Bilbao, 1939)
Degree in Economics from the Universidad del País Vasco
(Sarriko).
He is a Director of Construcciones Auxiliar de Ferrocarriles
(CAF), S.A. and a member of the Círculo de Empresarios
Vascos and of the Consejo de la Asociación para el
Progreso de la Dirección (APD) Zona Norte.
He spent most of his professional career at General
Eléctrica Española, S.A. and Fabrelec-Westinghouse.
Subsequently, he joined Banco de Vizcaya, where he was
Assistant General Manager, which position he also held at
Banco Bilbao Vizcaya (BBV).
He has been Executive Chairman of Bilbao Bizkaia Kutxa
(BBK), Vice-Chairman of Confederación Española de Cajas
de Ahorro (CECA) and Director of other entities, as well as
a member of the Board of Trustees of various Foundations,
such as COTEC and Museo Guggenheim Bilbao.
30
He is a Director of Metrovacesa, S.A., a member of the
Advisory Committee of Cierval, of the Instituto Español de
Analistas Financieros and of the Board of Trustees of Feria
Muestrario Internacional de Valencia, as well as of a
number of foundations and institutions, such as
Fundación Universidad Empresa (ADEIT) and Fundación
de Estudios Financieros.
He has been Chairman of Bancaja, Banco de Valencia
and Banco de Murcia, Vice-Chairman of Federación
Valenciana de Cajas de Ahorros and of Autopistas del
Mare Nostrum, S.A. (AUMAR), as well as a Director of
Confederación Española de Cajas de Ahorros (CECA),
Abertis Infraestructuras, S.A., Enagas, S.A., Aurea
Concesiones de Infraestructuras, S.A. and Instituto
Valenciano de Investigaciones Económicas (IVIE).
He has also been Chairman of Fundación Bancaja and a
member of the Board of Trustees of Fundación Premios
“Rey Jaime I,” among other entities.
Mr. SEBASTIÁN BATTANER ARIAS (Salamanca, 1941)
Degree in Economics from Universidad Comercial de
Deusto and degree in Law from Universidad de
Valladolid.
He is a practicing lawyer and a member of the Board of
Directors of Ibermutuamur, as well as a member of the
Board of Trustees of several foundations, such as
Fundación Duques de Soria and Fundación Santa María
la Real de Aguilar de Campoo.
He started his professional career at Aceros de
Llodio, S.A. and Tubos Especiales Olarra, S.A.
Subsequently, he held management positions at
financial institutions, such as Unicaja and Caja de
Ahorros de Salamanca y Soria.
He has been Chairman of Caja Duero, Grupo de
Negocios Duero, S.A., Leasing del Duero, S.A. and Unión
del Duero de Seguros Generales y de Vida. He has been
a Director of Sociedad Española de Banca, of
Confederación Española de Cajas de Ahorro (CECA) and
of Uralita, S.A., and a member of the Board of Trustees
of various foundations and institutions, such as
Universidad Pontificia de Salamanca.
He has been a professor at Universidad de Deusto and at
the Centro Técnico de Nuevas Profesiones de Salamanca.
Mr. XABIER DE IRALA ESTÉVEZ (New York, 1946)
Ms. INÉS MACHO STADLER (Bilbao, 1959)
Industrial Engineering Degree and Master’s Degree in
Business Administration from De La Salle University
(Philippines).
Degree in Economics from Universidad del País Vasco,
Master’s Degree in Economy from École des Hautes Études
en Sciences Sociales in Paris and Doctorate in Economy
(Ph. D) from the same academic institution and from
l’École Nationale de la Statistique et de l'Administration
Économique.
He is Chairman of Bilbao Bizkaia Kutxa (BBK), Norbolsa
and Biharko, and Director of Grupo Barceló and
Euskaltel, S.A.
At the institutional level, he is Chairman of Fundación
Cultural BBK, BBK Solidarioa and Gazte Lanbidean, as well
as of the Cámara de Comercio Hispano-Filipina. He is
Honorary Chairman/Founder of Exceltur, as well as a
member of the Advisory Board on International
Competitiveness to the President of the Philippines, of the
Executive Committee of Museo Guggenheim Bilbao, of
the Board of Trustees of Fundación Museo Marítimo Ría
de Bilbao, of the Executive Committee of COTEC and of
the Board of Governors of Asociación para el Progreso de
la Dirección (APD).
He has been Chairman of Iberia, Líneas Aéreas
Españolas, S.A., Executive Vice-Chairman and Chief
Executive Officer of Grupo ABB (Madrid), Finance
Vice-Chairman of General Electric CGR (París), Director of
Financial Programs of General Electric-International
Operations (London), Chief Executive Officer of GE
Portuguesa (Lisbon), Sole Director of CONELEC (Bilbao)
and Chief Executive Officer and Director of Finance of
General Eléctrica Española. At the institutional level, he
has been Chairman of the International Air Transport
Association (IATA) and of the Feria Internacional de
Turismo de Madrid (FITUR).
Mr. IÑIGO VÍCTOR DE ORIOL IBARRA (Madrid, 1962)
BA in International Business, graduate of the Executive
Corporate Management Program at IESE and Financial
Analyst (CEFA) from the Instituto de Analistas Financieros.
He is a Director of Empresa de Alumbrado Eléctrico de
Ceuta, S.A.
Author of scores of books, reports and papers focusing on
industrial economy problems, contracts and regulatory
matters, she has taught and done research at Universidad
del País Vasco (Bilbao) and Universidad Autónoma de
Barcelona, as well as at the Universities of California,
Copenhagen, Leuven and Munich. She is currently a
Professor of Economics in the Economics and Economic
History Department of Universidad Autónoma de
Barcelona.
Mr. BRAULIO MEDEL CÁMARA (Marchena,
Sevilla, 1947)
Degree in Economics and Corporate Sciences from
Universidad Complutense de Madrid and Doctorate in
Economics and Corporate Sciences from Universidad de
Málaga. Professor of Public Finance at the Universidad de
Málaga.
He is Chairman of Unicaja since its incorporation in
1991, as well as of some of the companies of Grupo
Unicaja. He is also Chairman of Federación de Cajas de
Ahorros de Andalucía and of Aquagest Sur, S.A. and
Vice-Chairman of Confederación Española de Cajas de
Ahorros, of which he was CEO until 1998. He is a
Director of Abertis Infraestructuras, S.A., Caja de Seguros
Reunidos, Compañía de Seguros y Reaseguros, S.A. and
of the AZVI, S.L. Group of Companies.
He was Deputy Director for Economy and Finance of the
Junta de Andalucía and has published over one hundred
scientific works, including books and papers in specialized
publications.
Mr. JOSÉ CARLOS PLA ROYO (Tarragona, 1952)
He has developed his professional career at the
IBERDROLA Group, where he has served as Director of
Management Control at Amara, S.A. and as financial
analyst in the Financial Division of IBERDROLA, S.A.
Recently, he became Director of Corporate Governance for
the Americas, representing IBERDROLA, S.A. on various
Boards of Directors of the Group’s companies in Latin
America.
Degree in Economics from Universidad de Barcelona,
Master’s Degree in Business Administration from ESADE
and Certified Auditor.
He is currently the Chairman of BBVA Seguros S.A. de
Seguros y Reaseguros. In addition, he is Chief Executive
Officer of Grupo Faustino and a Director of the pension
fund manager BBVA Provida in Chile.
31
Types of Directors
Pursuant to the provisions of Article 37 of the By-Laws
and Article 10 of the Regulations of the Board of
Directors, approved on February 25, 2004, Directors must
fall within one of the following four categories:
a) Executive Directors: those Directors who perform
executive or management duties at the Company or at
one of the companies included within the IBERDROLA
Group, and those with any title who are professionally
and permanently connected to the Company performing
duties in the day-to-day management thereof.
b) External proprietary Directors (representing a major
shareholder): Directors (representing a major
shareholder): those non-executive Directors who own,
or represent owners of, significant stable interests in
the share capital of the Company.
c) External independent Directors: those non-executive
Directors not representing a major shareholder who
are appointed based on their personal and
professional prestige and their experience and
knowledge for the performance of their duties. Such
Directors shall have no substantial direct or indirect
connection to the Company.
In this regard, the following persons may not be
appointed as independent Directors if such persons
are, or have been during the last two (2) years:
-
Managers of the Company or of any of the companies
that are members of the IBERDROLA Group.
-
Directors of any of the companies that are
members of the IBERDROLA Group, except if they
have acted as independent directors thereof.
-
Recipients of any kind of remuneration or
compensation payable by the Company or by any
of the companies that are members of the
IBERDROLA Group other than such as they may be
entitled to collect for holding office as Directors.
-
Significant shareholders or managers of companies
to which the Company or any of the companies
that are members of the IBERDROLA Group has
made, or from which the Company or any of the
companies that are members of the IBERDROLA
Group has received, substantial payments.
d) Other external Directors: those external Directors
who do not have status as proprietary or
independent directors.
32
In addition, the By-Laws provide that the Board of
Directors shall be composed such that the external or
non-executive Directors, with the presence of the
independent Directors, represent a majority over the
executive Directors. This is a mandatory instruction for
the Board of Directors itself, which must follow it in the
exercise of its powers to propose appointments of
Directors to the shareholders and to make interim
appointments of Directors to cover vacancies, but merely
constitutes guidance for the shareholders.
Powers of the Board of Directors
Article 34 of the By-Laws and Article 7 of the Regulations
of the Board of Directors provide that:
1. The Board of Directors has the power to adopt
resolutions regarding all matters not assigned by Law or
these By-Laws to the shareholders.
2. As a general rule, the Board of Directors, which has the
widest powers and authority to manage, direct,
administer and represent the Company, shall entrust the
day-to-day management of the Company to the
representative management decision-making bodies and
shall focus its activity on the general duty of supervision
and on consideration of those matters which are of
particular importance to the Company.
The aforementioned articles then enumerate, by way of
example and not of limitation, the powers of the Board of
Directors.
In order to exercise the powers of the Board, and
particularly in connection with matters relating to the
economic, environmental and social development of the
Company, each Director may request the hiring of
external advisors, whose services shall be paid for by the
Company, for the analysis of specific problems with a
certain degree of complexity that arise during the
performance of office. Likewise, the Nominating and
Compensation Committee and the Audit and Compliance
Committee may hire external advisory services provided
by professionals that will report directly to the Chairman
of the corresponding Committee.
Article 36 of the Regulations of the Board governs
conflicts of interest affecting Directors and persons
related thereto, and provides that Directors must give
notice of the conflict when it occurs and abstain from
deliberating and voting on the matter in question. The
2006 Annual Corporate Governance Report refers to
conflicts of interest affecting Directors in section C.4.
thereof.
Committees of the Board of Directors
Pursuant to the provisions of Article 42.1 of the By-Laws,
“The Board of Directors must create and maintain an
Executive Committee, an Audit and Compliance Committee
and a Nominating and Compensation Committee.”
significant to the Company or the Group, assessing the
conformity thereof to the Budget and the Strategic Plan
and reviewing and monitoring business risks and,
therefore, taking into consideration the environmental
and social aspects thereof.
Thus, the Board of Directors of IBERDROLA has the
following Committees:
Pursuant to the provisions of Article 24.2. of the
Regulations of the Board, this Committee shall be
composed of the Directors that the Board designates with
the affirmative vote of two-thirds of its members, with a
minimum of five (5) Directors and a maximum of eight (8).
As of December 31, 2006, the Committee consists of six (6)
Directors, with the Chairman of the Board & Chief
Executive Officer and the Vice-Chairmen being ex officio
members thereof (see table 3).
-
Executive Committee.
-
Audit and Compliance Committee.
-
Nominating and Compensation Committee.
The duties and responsibilities of these Committees are
described in detail in the 2006 Annual Corporate
Governance Report.
Executive Committee
Pursuant to Article 43 of the By-Laws, the Executive
Committee has all the powers inherent to the Board of
Directors, except for those that may not be delegated
pursuant to legal or by-laws restrictions, namely, the
rendering of accounts, the submission of balance sheets
to the shareholders at the General Shareholders’ Meeting,
and such powers as the shareholders may grant to the
Board without the power of delegation.
The position of Secretary of the Executive Committee is
held by the Secretary of the Board of Directors and of the
Company.
As provided by Article 24.4. of the Regulations of the
Board, the Executive Committee must meet at least two
times per month and must report on the resolutions
adopted by it to the Board of Directors at its next meeting.
During fiscal year 2006, it held 22 meetings.
In addition, this Committee performs the duties inherent
to a Strategy and Investment Committee, to the extent
that it devotes most of its time to making proposals or
submitting reports to the Board of Directors on all
strategic decisions, investments and divestitures that are
TABLE 3
Executive Committee
Position
Chairman
Member
Member
Member
Member
Member
Secretary
Director
Mr. Xabier de Irala Estévez
Mr. José Carlos Pla Royo
Type
Executive
Independent
Independent
Independent
Proprietary
Proprietary
33
Audit and Compliance Committee
At its June 25, 2003 meeting, the Board of Directors of
IBERDROLA resolved to create, pursuant to Financial System
Reform Measures Law 44/2002, of November 22, the Audit
and Compliance Committee of the IBERDROLA Group, which,
as of December 31, 2006, was composed as shown in table 4
below.
The Audit and Compliance Committee is an internal
informational and consultative body with no executive
functions, but with information, advisory and
proposal-making powers within its area of activity. Articles
44 of the By-Laws and 3 of the Committee’s Regulations
describe the powers and duties of this Committee, which
held 11 meetings during fiscal year 2006.
TABLE 4
Audit and Compliance Committee
Position
Chairman
Secretary-Member
Member
Director
Mr. Ricardo Álvarez Isasi
Mr. Julio de Miguel Aynat
Mr. Sebastián Battaner Arias
Nominating and Compensation Committee
This is an internal body of the Board of Directors with an
informational and consultative role, without executive
functions, but with information, advisory and proposalmaking powers within its area of activity. The operation
thereof is governed by the provisions of Article 45 of the
By-Laws, Article 26 of the Regulations of the Board and
those contained in its own Regulations.
As of December 31, 2006, the composition of the
Nominating and Compensation Committee was as shown
in table 5.
The position of Secretary of this Committee is held by
the Secretary of the Board of Directors and of the
Company.
Type
Independent
Independent
Independent
Article 2 of the Regulations of the Nominating and
Compensation Committee enumerates the powers thereof.
During fiscal year 2006, this Committee held 5 meetings.
All of the proposals made at such meetings were
subsequently approved by the Board of Directors. These
proposals concerned the withdrawal, appointment and
reclassification of Directors and the appointment of the
Chairman of the Board of Directors. With regard to
compensation, it proposed the amount and distribution of
the allocation mandated by the By-Laws and the
compensation payable to the management team.
Sections B.1.8. and B.1.9. of the 2006 Annual Corporate
Governance Report, as well as the Company’s Annual
Report, provide a detailed description of the compensation
of the Board of Directors and of Senior Management.
TABLE 5
Nominating and Compensation Committee
Position
Chairman
Member
Member
Secretary
34
Director
Type
Independent
Independent
Independent
Chairman & Chief Executive Officer
The Chairman of the Company, of its Board of Directors
and of the Executive Committee thereof represents
IBERDROLA with the broadest powers, including the
power, in urgent cases, to adopt such measures as he
deems advisable in the interests of the Company.
As Chief Executive Officer, he has received by delegation
all the powers that may be delegated under the law and
the By-Laws.
MANAGEMENT STRUCTURE
TABLE 6
Composition of Management
Chairman & CEO
Corporate Governance Divisions
Secretary of the Board (1)
Chief Internal Audit Officer (2)
Corporate Divisions
General Secretary
Chief Financial Officer
Chief Corporate Resources Officer
Chief Strategy and Development Officer
Deputy to the Chairman
Business Divisions
Operations (3)
Regulated Business Director - Spain
Deregulated Business Director - Spain
Latin America Director
Renewable Energy Director
Mr. Luis Javier Aranaz Zuza
Mr. Julián Martínez-Simancas Sánchez
Mr. José Sáinz Armada
Mr. Fernando Becker Zuazua
Mr. José Luis del Valle Doblado
Mr. Joaquim Pina Moura
Mr. José Luis San Pedro Guerenabarrena
Mr. Javier Villalba Sánchez
Mr. Francisco Martínez Córcoles
Mr. Gonzalo Pérez Fernández
Mr. Xabier Viteri Solaun
(1) Reporting to the Board of Directors.
(2) Functionally controlled by the Audit and Compliance Committee of the Board.
(3) Includes the Administration, Regulation and Control Division.
With regard to the Company’s economic, environmental
and social performance, it may be noted that the
compensation payable to the Management Team of the
IBERDROLA Group includes, among other items,
variable compensation linked to the objectives achieved
in connection with financial as well as environmental
and social aspects.
35
Management Committees
IBERDROLA’s Management has two main Committees:
Other Committees directly related to sustainability
a) Corporate Reputation Committee
-
Operating Committee
-
Management Committee
Operating Committee
The Operating Committee is composed of:
-
Chairman & Chief Executive Officer
-
Secretary of the Board of Directors
-
General Secretary
-
Director of Operations
-
Spain Deregulated Business Director
-
Spain Regulated Business Director
-
Chief Financial Officer
-
Chief Corporate Resources Officer
-
Renewable Energy Director
Since 2004, the Corporate Reputation Committee has
coordinated the work needed to implement systems and
develop actions which allow for the achievement and
maintenance of a leading position in the corporate world.
It is directly supervised by the Chief Corporate Resources
Officer.
Meeting periodically every two or three months, it
manages the aspects connected to how IBERDROLA is
perceived by its interest groups, and identifies and puts
into practice the appropriate actions for improvement of
such perception.
In order to develop the aforementioned policies, various
corporate and business division organizations -a total of
17 members- participate in this Committee.
b) Environmental Committees
The Committee meets once a week, allowing for day-today monitoring of the company and its environment, and
makes the decisions required to appropriately respond to
changes in the markets and in the different variables
affecting them.
Management Committee
The Management Committee is made up of the Chairman
& Chief Executive Officer, the Corporate Governance
Divisions, the Corporate Divisions and the Business
Divisions, as well as the Gas, Communications, and NonEnergy Business and Assets Divisions.
The Committee meets periodically and deals with the
overall operation of the Company, formulating lines of
action for the Business Divisions and the Corporation in
order to comply with the Strategic Plan, tracking the
objectives that have been defined and the established
budget, and implementing the measures required to
achieve a convergence between the actual progress of the
Company and the provisions of the strategic planning.
36
The IBERDROLA Group’s environmental activities are
coordinated by means of "Environmental Committees,"
which meet on a regular basis and which are an important
mechanism for liaison, coordination, communication and
exchange of experiences throughout the Group.
The chapter on Environmental Information provides a
detailed description of the responsibilities of these
committees within the Environmental Management
system. The work of these committees is directly
supervised by the Director of Environment, Innovation
and Quality, within the Strategy and Development
Division.
c) Other Committees
Various committees and bodies have been established
within the operational areas of the various corporate and
business organizations and which are responsible for
activities connected to the relationship between
IBERDROLA and its stakeholders. Such committees are
specified and described in the relevant sections of this
Report.
RISK CONTROL AND MANAGEMENT
Since 2004, IBERDROLA has had a General Risk Policy,
approved by its Board of Directors. In applying this
policy, IBERDROLA endeavors to provide the maximum
level of guarantees to both the shareholders and the
other interest groups, and commits itself to developing
all of its capabilities in order for relevant risks of all
kinds to be adequately identified, measured and
managed. In fulfilling this commitment, the Board of
Directors and its Executive Committee are assisted by
the Audit and Compliance Committee as the body that
supervises and reports on the adequacy of the internal
evaluation and control of significant risks. In order to
implement this policy, IBERDROLA has developed a
Comprehensive Risk Control and Management System,
which was granted the ISO 9001:2000 quality certificate
by AENOR in November 2005 and is described in detail
in the Group’s Annual Corporate Governance Report.
For purposes of this Sustainability Report, below is a
description of those main risks and opportunities
covered by this system that may pose threats to the
sustainable development strategy and objectives
pursued by the Company.
Environmental aspects
IBERDROLA’s decided focus on the development of new
and more environmentally-effective technologies (gas
combined cycle plants and renewable energy), together
with existing generation facilities having a strong
hydroelectric and nuclear power component, as well as
the investments made in order to improve the
distribution network, have all contributed to the Group
being well-positioned to face the environmental
challenges arising from sustainability, with innovation in
this field and eco-efficiency having become mainstays of
its strategic development. In this regard, and from the
Comprehensive Risk System perspective, it is
contemplated that:
• The IBERDROLA Group’s activities are subject to a
large number of regulations and provisions which: 1)
demand performance of environmental impact studies
and securing licenses and permits subject to
environmental requirements, and 2) provide for taxes
and other market instruments of an environmental
nature (trading in greenhouse gas emission rights).
• There are other environmental risks inherent in the
Group’s activities, such as those deriving from the
management of emissions, waste or effluents or
other effects on biodiversity, which may give rise to
claims for damages, sanction proceedings and
damage to the Group’s image and reputation.
The Environmental Management Systems that have been
implemented contemplate the management of these risks
and establish measures for minimization thereof at the
Company’s production and distribution facilities.
Social aspects
IBERDROLA’s risk management also places particular
emphasis on social aspects. These involve, among other
risks, those relating to security, professional ethics,
professional development and social responsibility.
IBERDROLA has in place the following noteworthy
policies and tools: Environmental Policy, Code of
Professional Conduct, Ten Guidelines for Social
Responsibility, Special Occupational Risk Prevention Plan,
and Competency-based Professional Development Model,
which are described elsewhere in this Report.
In addition, the Comprehensive Risk System contemplates
risks associated with electric power supply quality, which
is one of the mainstays of the new strategic development.
Economic aspects
By means of specific risk policies, the Comprehensive Risk
System establishes limits upon the investments and
actions of the Business Areas, thus allowing for a
controlled approach to opportunities and a mitigation of
the associated risks.
Furthermore, under the Risk Policy, the Company
encourages continual improvement as well as research
into and technological development of the systems
required to enhance efficiency in processes and
technologies, with a view to achieving cost reductions that
ensure the Group’s stability and competitiveness.
37
A Company that is
forward-looking
The 2001-2006 Strategic Plan, which entailed the
investment of more than 15,000 million euros in
the core energy business, the completion of
which enabled IBERDROLA to double in size and
income over the period, has favorably positioned
us to successfully face the future.
The strategy that will shape IBERDROLA’s steps
over the next three-year period, during which
the new project started by IBERDROLA five
years ago will see full completion, is based upon
two main pillars: organic growth, through a
9,000 million-euro investment in the Spanish
and international core energy business and in
continual efficiency improvements, and nonorganic growth, which involves the combination
agreement reached with ScottishPower at the
end of November 2006.
This transaction, valued at approximately
17,100 million euros, would give rise to one of the
European energy leaders, with a significant
complement between geographic and business
areas, and a strong position from which to face
the challenge of the single energy market.
IBERDROLA thus shows that the best Company is
the Company that holds the most promising
prospects for the future.
39
Planning ahead
Being ahead of its time has been a constant for IBERDROLA.
The 2001-2006 Strategic Plan has provided an effective
response to Sustainable Development needs and to social
concerns regarding care for the natural environment, in
which approach IBERDROLA has been a step ahead,
showing the way to its competitors. Over these five years,
the Company doubled in size and income following an
investment effort that is certainly unprecedented in the
Spanish electricity industry, and managed to do so by
increasing the Company’s production capacity from the
cleanest energy sources and with the best quality of
service.
IBERDROLA has become the world’s leading wind operator,
in addition to being one of the leading international
developers of combined cycles and the largest private
producer in Mexico. All of this has been achieved while
reaffirming our Company’s ongoing commitment to the
environment and to the needs of our customers,
shareholders and employees and, ultimately, of the
community in which we carry out our activities.
THE 2001-2006 STRATEGIC PLAN
Successful completion of the 2001-2006 Strategic Plan
At year-end 2006, IBERDROLA has successfully
completed the Strategic Plan presented five years ago,
having practically doubled the size and income of the
Company and posting a net profit of 1,660 million euros.
IBERDROLA successfully completed the
Strategic Plan presented five years ago,
doubling the Company’s size and income
Five years after the start of this Plan, IBERDROLA has
achieved the objectives defined for the key performance
indicators, which has allowed for strong growth in the
Company’s core business. Thus, as of year-end, the
Company has an additional 90% of installed capacity, has
increased energy production by 86%, supplies 50% more
energy 50% to almost 18.5 million users / managed
supply points (up 20%) all over the world, and posted a
21% improvement in supply quality in Spain (see chart 2).
This growth was possible thanks to the investment effort
made by IBERDROLA in recent years exceeding 15,000
million euros, with almost 11,500 million euros (75% of
the total amount) having been allocated to Spain. Of this
latter sum, approximately 7,000 million euros have gone
to the generation business, and almost 2,900 million
euros have been invested in the distribution business. The
international business has received 3,800 million euros, a
large part (60%) of which has been used for the
construction of new power plants.
CHART 2
Key performance indicators
Installed capacity
up 90%
Energy production
up 86%
Energy distribution
up 50%
Service quality in Spain
up 21%
Users - supply points
up 20%
Five years later, IBERDROLA has strengthened its position as
the world leader in wind power, with more than 4,100 MW in
operation; it is one of the leading international developers of
combined cycles, with almost 10,000 MW under management
(5,600 MW in Spain); it is the largest private generation
company in Mexico (it will have close to 5,000 MW in 2007);
and it is one of the most environmentally-friendly electric
companies in Europe, with 247 grams of C02/kWh produced
in 2006. Having a presence in almost 40 countries and on
four continents, the Company has also managed to offer
excellent service quality in Spain (with an ICEIT of less than
2 hours/year) as well as to position itself as one of the
companies with the best Corporate Reputation at the
domestic level (MERCO 2006) and one of the world leaders
(Best in Class 2006) for its social and environmental behavior.
Achieving and surpassing operational targets
In 2006, IBERDROLA not only achieved but in many cases
also surpassed the ambitious operational goals formulated
in the Strategic Plan, as shown in table 7.
TABLE 7
Operational target
Combined cycle plants in Spain (MW)
Renewable Energy (MW)
Combined cycle plants in Mexico (MW)
2000
507
-
2006 Plan Target
4,000
3,800
5,000
2006 Actual Target
4,800
4,434
5,000
Fulfillment
2007
(1,200 MW under construction)
Distribution
-
Improvements in quality
Excellent quality
41
Generation
Thanks to its focus on clean technologies for electric
power production, the IBERDROLA Group ended fiscal
year 2006 with an installed capacity of almost 30,400 MW
(2,593+ MW in new capacity) worldwide, up 9.3% from
2005, and 90% more (14,322+ MW) since the
commencement of the Plan. In Latin America, the
Company already has a capacity of 4,418 MW, up 34.3%
from the previous fiscal year.
One of the leading developers of combined cycle
plants in Spain
In Spain, IBERDROLA has not only managed to attain the
operating capacity goal established in the Plan
(4,000 MW) but has actually exceeded it as a result of
the entry into operation of the 800 MW Escombreras
(Murcia) combined cycle plant, and has also managed to
have nine combined cycle plants in operation at yearend 2006, totaling an installed capacity of 4,800 MW.
This figure establishes the Company as one of the
leading developers of these types of plants at the
domestic level (see table 8).
TABLE 8
Combined cycle plants inoperation in Spain
Combined
cycle
Castellón
Castejón
BBE (800 MW)
Tarragona (800 MW)
Santurce
Arcos Groups I and II
Aceca
Arcos Group III
Escombreras
Total
Capacity
(MW)
800
400
200 *
200 *
400
800
400
800
800
4,800
Entry
into service
Operational, 2002
Operational, 2003
Operational, 2003
Operational, 2003
Operational, 2004
Operational, 2004
Operational, 2005
Operational, 2005
Operational, 2006
(*) Attributable to IBERDROLA
The world leader in wind energy (1)
In 2006, IBERDROLA widely exceeded the objectives
formulated in the Strategic Plan (3,800 MW), reaching
year-end with a renewable energy operational capacity of
4,434 MW (3,994 MW in Spain and 440 MW abroad).
This figure represents almost a nine-fold increase in
installed capacity since the start of the Plan (see chart 3).
In addition, the Company has become the leading wind
power operator worldwide, with an operational capacity
of 4,102 MW at year-end.
CHART 3
Renewable energy installed capacity
(MW)
x 8.7
440
507
3,994
2000*
2006
International
Spain
(*) Consolidated by the equiti method
The largest private electric power producer in Mexico (2)
At year-end 2006, IBERDROLA had combined cycle plants
in operation or in an advanced state of construction with
a combined total capacity of almost 5,000 MW in Mexico
(see table 9), which means that the Company achieved the
objectives set out in its Strategic Plan and strengthened its
position as the largest private electric power producer in
Mexico and the second-largest in the country after the
state-owned company Comisión Federal de Electricidad
(CFE). This is a remarkable achievement, taking into
account that the Company started practically from scratch
at the beginning such Plan.
TABLE 9
IBERDROLA’s generation projects in Mexico
Project
Enertek
Monterrey
Altamira III & IV
La Laguna
Altamira V
Tamazunchale
Total
Capacity
(MW)
120
1,037
1,036
500
1,121
1,135
4,949
Entry
into service
Operational, 1998
Operational, 2002/03
Operational, 2003
Operational, 2005
Operational, 2006
2007
Distribution
Excellent service quality for almost 10 million users
in Spain
IBERDROLA has accomplished ahead of schedule the
objectives established in the Network Plan, included in
the Strategic Plan, which focuses on increasing and
maintaining the distribution infrastructure and
maximizing service quality.
(1) Source: In terms of installed capacity and based on public reports of competitor companies at year-end 2006.
(2) Source: Office of the Secretary of Energy (SENER), on the Internet at: http://www.sener.gob.mx/wb2/SenerNva/iiPro615
42
4,434
The Company has achieved excellent service quality in
Spain since the entry into force of the above-mentioned
Plan, by bringing its ICEIT (Installed Capacity Equivalent
Interrupt Time) from the 2.49 hours recorded in fiscal year
2000 to 1.96 hours at year-end 2006. This figure entails a
21% decrease since the commencement of the Plan, and
has earned IBERDROLA an outstanding position in the
provision of this service in Spain (see chart 4).
year-end 2006, almost double the amount of 852
million euros posted in 2000 (see chart 5).
CHART 5
Net profits
(e millions)
1,660
x2
CHART 4
Demand vs. service quality in Spain
852
+21%
2.49
1.96
+31%
IBERDROLA ICEIT (hours/year)
2006
In addition, the Company has applied the shareholder
compensation policy spelled out in the Strategic Plan -an
annual dividend increase of not less than 5%- by bringing
such dividend increase into line with the growth in net
profits.
75,800
2000
2000
99,520
2006
IBERDROLA Demand (million kWh)
The improvement in IBERDROLA’s service quality for
almost 10 million users in Spain (1.2 million more than at
the beginning of the Plan), who consumed 99,520 million
kWh in 2006 (up 31% since the beginning of the Plan), has
been possible thanks to the entry into service of additional
distribution infrastructure and the maintenance and
renovation of existing infrastructure. Since the beginning
of the Plan, the Company has brought into operation
182 substations (65 new and 117 extensive enlargements),
almost 15,300 transformer centers and more than
16,400 kilometers of high, medium and low voltage lines.
Thus, the results obtained by IBERDROLA during fiscal
year 2006 have allowed the Board of Directors to propose
the distribution of a dividend of 1.043 euros per share,
which, added to an attendance bonus of 0.02 euro per
share, results in compensation of 1.063 euros. This figure
is practically double the amount of shareholder
compensation at year-end 2006 (see chart 6).
CHART 6
Dividend
(euros/share)
x2
1.063*
0.535
Shareholder compensation
Gradual dividend growth in line with growth in net
profits
IBERDROLA has also fulfilled the principal
economic/financial objectives set out in the Strategic
Plan, by posting net profits of 1,660 million euros at
2000
2006
(*) Pending approval by the shareholders at the General Shareholders’ Meeting
according to the proposed allocation of profits/losses. Includes 0.02 euro
as attendance bonus.
43
Internationalization
After five years of profitable growth, of reinforcement of
the core business and of financial strengthening, we can
confidently undertake the successful international
expansion of IBERDROLA. The new 2007-2009 Strategic
Plan leads us further along the strategic path we have
followed during the last five years and gives a boost to
organic growth and internationalization as drivers of the
Company’s expansion, without forgetting our
commitment to the energy needs of the markets in
which we have a presence. We are starting a new
9,000 million-euro investment cycle that focuses on the
core energy business, strengthening our position in
Spain and making use of the profitable business
opportunities that may arise beyond our borders,
especially in Europe and the United States. Our aim is to
post profits in the amount of 2,350 million euros at the
end of the period and to continue to be a leader in our
contribution to Sustainable Development, with increased
internationalization, more renewable energy, more clean
generation and more quality.
THE 2007-2009 STRATEGIC PLAN*
2007-2009 STRATEGIC PLAN*
IBERDROLA’s Strategic Plan for the 2007-2009 period was
approved by the Board of Directors on October 3, 2006.
The new Plan rests upon the same principles
underpinning the Plan completed in 2006, and reaffirms
the Company’s commitment to contribute to the
sustainable development of the communities in which it
is present. The strategy is based on:
CHART 7
Net profits
(e millions)
2,350
+e 700
million
1,660
+e 800
million
852
• The energy business, contributing to meet the growing
energy demand expected for the next few years.
• New investment opportunities in various countries,
within the context of the unstoppable deregulation of
international energy markets.
• The focus on energy and environmental efficiency, in a
scenario in which energy is growing scarce and more
expensive, as the best manner of contributing to an
improvement in the dependence on energy and to the
fight against global warming.
The 2007-2009 Strategic Plan gives a boost
to growth and internationalization as
drivers of the Company’s expansion
With this Strategic Plan, IBERDROLA seeks to continue on the
path of the strategy first formulated in 2001, always in
pursuit of growth, improved returns and the creation of value
for shareholders, suppliers, individuals and society at large.
Financial/economic goals
In line with the policy of transparency of recent years, and
in accordance with the Plan, the Company expects to
achieve specific and measurable economic/financial goals:
• To reach attributable after-tax profits of 2,350 million
euros in 2009, which represents a cumulative annual
growth rate of 41.6% over the level achieved in 2006
and is practically triple the amount of 852 million
euros recorded in 2000 (see chart 7).
2000
2006
2009 (est)
• To pay a dividend of 1.50 euros per share in 2009,
maintaining the shareholder compensation policy of
linking growth in profits to dividends.
• Not to exceed a financial leverage level (measured as the
ratio of debt over debt-plus-equity) of 55% at the end of
the period, in tune with the Company’s policy to keep a
balance between investment efforts and balance sheet
strength.
2007-2009 investment plan*
IBERDROLA expects to invest 9,000 million euros in
activities of an organic nature during the 2007-2009
period, which represents a 20% increase over the
previous three-year period. Particularly noteworthy is
that 38% of the investments (3,400 million euros) will
go to foreign countries, vis-à-vis 27% under the previous
Plan, in line with the strategy of enhancing the Group’s
international business (see chart 8 on the following
page).
Also, the Plan provides for non-organic actions which are
not quantified, which will have to attain the growth and
profitability goals set out above without impairing the
Company’s financial strength. These actions include, as
further explained below, the project for amicable
combination with ScottishPower.
(*) Additional information on the 2007-2009 Strategic Plan may be found at IBERDROLA’s website: http://www.iberdrola.es/wcorp/corporativa/iberdrola?IDPAG=ESACCPLANESTRAT
See the Notice at the beginning of this 2006 Sustainability Report in connection with information regarding the 2007-2009 Strategic Plan.
45
CHART 8
Investments
2007-2009 acumulative investments (est.)
(e million)
(%)
+20%
9,000
International: 38%
Spain: 62%
7,500
2004-2006
2007-2009 (est)
Below is a description of the principal activities of an
organic nature contemplated by business line.
In the generation area, investments will serve three purposes:
-
To complete the gas combined cycle plant construction
program, with the entry into service of the Castellón 4
plant (800 MW), thus reaching an operating capacity of
5,600 MW in Spain (6,400 MW under management)
with this leading-edge technology.
-
To start a program for the construction of
hydroelectric (pumped storage and regulable) plants,
which are more flexible and free of CO2, emissions, in
order to satisfy new needs detected in the system:
peak-hour coverage and regulation. The program
extends beyond 2009 and contemplates the
development of 1,650 MW.
-
To improve the energy and environmental yield of
traditional thermal plants, by means of investments in
maintenance and renovation as well as the installation
of de-sulfuring facilities and other equipment for
reduction of contaminating emissions.
Deregulated Business in Spain
IBERDROLA will allocate approximately 1,750 million
euros to the deregulated business in Spain (19% of the
total amount), which includes the generation and supply
of electricity and gas.
Furthermore, in anticipation of consumption increasing
by more than expected (3.5%-4% of the annual average),
the Company has a large portfolio of combined cycle
projects (8,000 MW in Spain) for which the administrative
formalities are well underway. It also plans to bring into
service new cogeneration plants in Spain, which could
achieve a capacity of 670 MW.
Cortes la Muela II (Valencia)
46
Finally, IBERDROLA will promote various generation
projects in Europe, totaling approximately 5,000 MW. Of
note in this area are the initiatives already underway in
Portugal (Figueira da Foz combined cycle plant, with
850 MW) and Germany (Ludwigsau and Lauchhammer
combined cycle plants, totaling 2,000 MW).
In the supply area, IBERDROLA’s strategy will be oriented
to attracting and keeping the loyalty of new users, to the
extent that changes in Spain’s regulated rates so permit,
in order to optimize the margin in this business and
maximize its contribution to the Company’s results.
As to the gas business, the Company plans to reach a
business volume of 7,000 million cubic meters in 2009 to
meet the needs of its combined cycle and cogeneration
plants and serve its final users. The supply strategy will
continue to center on contract flexibility with the aim of
optimizing the value of IBERDROLA’s position in the gas
market.
Regulated Business in Spain
The regulated business in Spain (electricity and gas
supply) will account for 20% of all investments, in the
amount of 1,800 million euros. With supply points
being expected to increase by more than two million
during the effective period of the Plan, this business
unit will continue to influence network service quality.
For such purpose, it has set for itself the goal of a 25%
improvement in average interrupt times (ICEIT) as
compared to the average figure recorded in the
2000-2005 period.
Locust Ridge wind farm (Pennsylvania)
Latin America Business
IBERDROLA will continue to explore new business
opportunities in Latin America, where it will invest
approximately 1,550 million euros (17% of the total
amount) originating, to a large extent, from the cash flow
generated in the region.
Renewable Energy
The renewable energy business looks to become the
main driver of IBERDROLA’s strategy for growth during
the 2007-2009 period. Specifically, this business will
draw 37% of all investments, approximately 3,250
million euros, with the aim of achieving an installed
capacity of at least 7,000 MW (6,521 MW will be windpowered and 1,447 MW will be developed abroad).
For this purpose, IBERDROLA already has a project
portfolio in excess of 18,400 MW, and has already closed a
number of international transactions conducted in 2006
that have granted it entry into markets with high
prospects for future development, such as the North
American market. In addition, it has signed numerous
agreements for the supply of turbines which ensure
adequate development of the plans for installation of the
new contemplated capacity.
Combined cycle plant at Tamazunchale (Mexico)
47
In Mexico, the Company plans to solidify its position as
the largest private electricity producer, for which purpose
it seeks to reach an installed capacity of more than
5,000 MW. Moreover, it will participate in new calls for
bids related to electricity generation.
In addition, IBERDROLA seeks to continue improving
efficiency and service quality in Brazil, while exploring
new investment opportunities in generation and
transmission.
All of the above will be pursued without impairing the
solid structure of the Company’s balance sheet, which will
be reinforced during this period. Thus, the leverage ratio
is projected to stand below 55% in 2009.
Commitment to society and individuals
The IBERDROLA Group will direct a large share of the
value it creates throughout these years to the
strengthening of its commitment to economic,
technological and social development in the countries
where it does business.
Engineering and non-energy business
Although the Strategic Plan focuses mainly on the
energy business, the Company maintains its
investments in other profitable, growth-contributing
activities. Thus, engineering and non-energy businesses
will be allocated 7% of all investment between 2007
and 2009 (650 million euros).
The Engineering business will rest upon its three
current strategic pillars: winning a larger number of
external customers, specialization in the energy
business and development of the already considerable
internationalization of its activities. It is expected that
in 2009, sales to the group will not account for more
than 30% of the total and that 70% of invoicing will
come from contracts abroad.
Mock-up of the IBERDROLA Campus
In the Real Estate business, the aim is to strengthen its
position in Spain and to start looking for business abroad,
with a careful selection of the target markets.
Financial and balance sheet strength
The investment process described above will be financed
with generated funds and by resorting to indebtedness
and the divestiture of non-strategic assets. As for such
divestitures, the Plan contemplates the sale of assets
valued at 1,000 million euros, which figure has increased
by another 1,000 million euros following the
announcement of the combination agreement with
ScottishPower.
The financial actions that have been planned in the
financing field will allow for coverage of the needs arising
from planned investments of 9,000 million euros and
from the distribution of an accrued 3,000 million euros
that the Company plans to distribute to the shareholders
as dividend compensation, while maintaining an adequate
diversification of debt in terms of currencies, duration and
costs.
48
IBERDROLA’s decisive wager on Spain’s industrial
fabric will lead, as projected by the Company, to
procurement from Spanish companies in an amount
close to 7,600 million euros out of a total of
9,500 million euros during the three-year period. Total
contribution to public treasuries is estimated to
amount to 6,500 million euros (up 35% on the
previous period).
IBERDROLA will use a large share of the
value it creates to strengthen its
commitment to society and individuals
In addition, the Company’s contribution to R&D&i
(Research, Development and Innovation) during this
period will translate into estimated investments of more
than 200 million euros.
Also worthy of note is the Company’s commitment to
individuals. IBERDROLA plans to engage more than
1,000 professionals during the effective period of the
Plan, such that at the end of the period it will have
more than 17,000 employees.
Additionally, IBERDROLA will commence a number of
activities geared towards boosting talent and
encouraging initiative, creativity and efficiency on the
part of the individuals making up the Group. The
importance attached to training in this area of activity is
illustrated by the 200 million euros planned to be
allocated (double the annual average under the previous
Plan), the two million hours of training hours
contemplated (up 30% per employee) and the
launching of the Iberdrola Campus project, which will
be funded with a 50 million euro investment.
As regards dividends, the policy of growth in line with net
profits will be maintained, such that the dividend is
expected to come to 1.50 euros per share in 2009, with
more than 3,000 million euros to be distributed to the
shareholders during this period (see chart 9).
CHART 9
Dividends
(euros/share)
1.500
+0.437
e/share
1.063*
+0.528
e/share
0.535
2000
2006
2009 (est)
(*) Pending approval by the shareholders at the General Shareholders’ Meeting
according to the proposed allocation of profits/losses. Includes 0.02 euro
as attendance bonus.
49
Growth
The planned combination of IBERDROLA with
ScottishPower entails the creation of a leading
European energy company, with a pro forma
enterprise value of 63,800 million euros, a presence
in fast-growing markets and a balanced and solid
structure, which brings the Company to the top
echelon in the international energy arena. The
combination of both companies will enhance our
world leadership in renewable energy. This is a
project based upon growth, internationalization
and efficiency, fully aligned with our new Strategic
Plan, which reinforces our commitments to the
creation of value for the shareholder, service
quality, respect for the environment and social
development, offering new professional
development opportunities to the Company’s
workforce.
IBERDROLA-SCOTTISHPOWER COMBINATION AGREEMENT*
THE IBERDROLA-SCOTTISHPOWER COMBINATION
On November 27, 2006, the boards of directors of
IBERDROLA and ScottishPower, meeting in Madrid and
Glasgow, respectively, reached an agreement regarding the
terms of an offer made by IBERDROLA for all of the share
capital of ScottishPower.
The transaction will be carried out by IBERDROLA, directly
and/or through a wholly-owned subsidiary. The transaction
is expected to be implemented by means of what is known
under British law as a Scheme of Arrangement, pursuant to
section 425 of the British Companies Act. Formal notice of
the agreement was provided to ScottishPower’s
shareholders on February 26, 2007, and subject to
compliance with the customary conditions and
requirements in this kind of transaction, it is expected that
the agreement will become effective in April 2007.
Terms of the agreement
The terms of the agreement reached with ScottishPower are
that IBERDROLA will acquire a portion of the ordinary shares
of ScottishPower by means of the payment of cash
consideration (or, if applicable, by means of the delivery of
loan notes or a combination of loan notes and cash).
IBERDROLA will acquire the remaining ordinary shares of
ScottishPower by means of the delivery of newly-issued
common shares of IBERDROLA.
The economic effect of the aforementioned terms for the
ScottishPower shareholders would be equal to receiving
400 pence sterling in cash and 0.1646 new IBERDROLA
shares (valued at 365 pence sterling at the close of business
on November 27) for each of their shares.
The economic effect for the holders of ScottishPower ADSs
would be equal to receiving 1,600 pence sterling and
0.6584 new IBERDROLA shares.
In addition, before the transaction is closed, ScottishPower
will approve an extraordinary dividend of 12 pence sterling
per share (48 in the case of ADSs), which will be paid once
the transaction is completed.
Taking into account the closing price of the IBERDROLA
shares on November 27, which was 32.75 euros, and an
exchange rate of 1.4755 euros: 1 pence sterling, each share
of ScottishPower is valued under the terms of the offer at
777 pence sterling, which means that the value of this
company would come to almost 17,100 million euros. In
order to pay the consideration in shares, IBERDROLA will
issue approximatel 263.4 million new shares, and therefore,
it is expected that the existing ScottishPower shareholders
will receive approximately 22.6% of IBERDROLA’s capital
following the enlargement being contemplated.
ScottishPower’s combination with IBERDROLA is
contingent, inter alia, upon the approval by the
shareholders of both companies and by certain regulatory
authorities, such as the European Commission and the
United States Federal Energy Regulatory Commission (see
the status of the transaction in table 10).
The Board of Directors of ScottishPower believes that the
terms of the takeover offer are fair and reasonable, and
therefore, it has unanimously recommended that the
company’s shareholders vote in favor of the transaction at
the appropriate General Shareholders’ Meeting, which
might be held during the first quarter of 2007.
Economic effect of the terms of the agreement**
400 pence sterling
in cash
For each
share of
ScottishPower
0.1646 IBERDROLA shares
= 365 pence sterling
765 pence
sterling
777 pence
sterling
Special dividend of 12 pence sterling
(*) Additional information on the IBERDROLA-ScottishPower combination agreement can be found on our website:
http://www.iberdrola.es/wcorp/corporativa/iberdrola?IDPAG=ESSCOTTISH
(**) As of the date of announcement of the transaction (11/28/06).
51
Status of the transaction
As regards the requisite regulatory approvals, the status
thereof as of the date of preparation of this 2006
Sustainability Report is summarized in the table below:
TABLE 10
Regulatory notices and approvals
European Union
U.S.A.
Petition filed
Approval
received/expected
European Commission
01/12/07
02/15/07
Hart-Scott-Rodino
12/21/06
01/22/07
Federal Energy Regulatory Commission
12/22/06
01/25/07
Federal Communications Commission
01/22/07
02/05/07
Exxon-Florio
01/22/07
02/21/07
NY Public Service Commission
01/03/07
02/28/07
Strategic sense: acceleration of the 2007-2009
Strategic Plan and creation of value
This agreement was reached after a five-year period of
strong organic growth at the Company and the creation
of value for IBERDROLA shareholders, thanks to the
fulfillment of the 2001-2006 Strategic Plan.
The proposed amicable transaction satisfies all the
criteria established with respect to non-organic growth
in the 2007-2009 Strategic Plan. The basic operating
principles that have been defined are growth,
internationalization and efficiency, all with the ultimate
aim of achieving greater profitability levels for
IBERDROLA.
From a strategic point of view, IBERDROLA believes that
the combination is attractive and will allow for the
creation of one of the leading companies in the
European energy market, with a broad geographic scope
and a strong platform for future growth.
The transaction will not only reinforce IBERDROLA’s
internationalization but will also confirm the
Company’s position as one of the world leaders in the
renewable energy market. In addition, the Company
expects the combination of both companies to generate
synergies in annual pre-tax costs of up to 130 million
euros (to be fully achieved in the third fiscal year
following the combination) and average annual savings
(optimization of investments) of 44 million euros
during the first five fiscal years(1).
Complementary business models
E
L
E
C
T
R
I
C
I
T
Y
Generation
Renewable
Energy
Transmission
Distribution
Supply
Generation
Renewable
Energy
Transmission
Distribution
Supply
(1) The estimated annual savings have been calculated on the basis of the cost and operating structures of the IBERDROLA and ScottishPower Groups as they exist
today. These statements regarding estimated annual savings are related to future matters and to circumstances which, due to the nature thereof, entail risks,
uncertainties, contingencies and other factors. Consequently, the aforementioned cost savings may not be achieved, or those achieved may differ significantly from
estimates.
52
IBERDROLA-SCOTTISHPOWER COMBINATION AGREEMENT
Moreover, from the financial point of view, the proposed
takeover is expected to generate an immediate increase in
profits, while maintaining IBERDROLA’s commitment to
invest in the energy sector and the Company’s financial
strength. IBERDROLA has secured financing commitments
in the amount of 11,738 million euros from ABM Amro
Bank NV, Barclays Capital and The Royal Bank of Scotland
in order to finance the cash component of the
consideration and refinance certain items of
ScottishPower’s existing indebtedness.
One of the European energy leaders
As a result of all of the above, the combination of both
companies will give rise to the third-largest European
energy company in enterprise value, which stands at
63,800 million euros (pro forma figure as of November
27, 2006 - see chart 10). In sum, the combination allows
for the creation of a new Company focused on growth,
with higher returns and a stronger, more balanced and
increasingly global structure.
Reinforcement of commitments to all groups
This transaction reinforces the commitments to all groups
with which IBERDROLA has ties: shareholders, customers,
individuals and society in the countries in which it
operates:
-
To shareholders, by generating greater returns and
creating more value.
-
To customers, by investing to continue improving
service quality.
-
To the individuals working at the Company, by
focusing on their training and development and
offering them new professional opportunities.
-
To society, by respecting the environment, promoting
the use of clean energy, increasing investments in
R&D & Innovation and creating new opportunities for
vendors.
CHART 10
Enterprise value
(e thousand million)
108
70
64
44
SCOTTISH
POWER
IBERDROLA
IBE+SPW
E.ON
EDF
20
N.B.: Market capitalization and exchange rate as of November 28, 2006. Net
Debt excludes provisions and includes minority interests.
53
A Company that
is larger
Taking advantage of the strength of a venture that is
already more than a hundred years old, we have
managed to take a qualitative and quantitative leap
over the last five years, doubling the size and income
of IBERDROLA by developing a pioneering strategy
focused on the core energy business and the use of the
best corporate management practices.
We set a number of goals between 2001 and 2006, the
achievement of which was a daily challenge for all the
individuals working at this Company. At IBERDROLA, we
are now more transparent and follow the best
corporate governance practices, with the aim of
catering to the needs of the various groups of persons
with which we are related. We have also become more
profitable, thanks to the Company’s progress in the
operating and economic/financial areas and the
growing credibility of the management team.
IBERDROLA has doubled its installed capacity thanks to
the use of more efficient and environmentally-friendly
electricity generation sources -gas combined cycle
plants and renewable energy-, thus contributing
decisively to ensuring energy supply in Spain. Our
commitment with respect to the quality we offer to
our customers has translated into the achievement of
a service quality rate that equals the best figures in
Europe.
Two past and future strategic pillars have been and will
continue to be decisive for our Company. On the one
hand, our historical defense of the environment and of
sustainable development, which has turned us into a
world benchmark in the renewable energy area and
pioneers in the advocacy for the Kyoto Protocol. On
the other hand, our traditional pursuit of international
expansion, which has positioned us as one of the
leading private electric companies worldwide, with a
presence in almost 40 countries. We are thus proving
that the best Company is the one that relies on a plan
for profitable and responsible growth.
55
Context
Over the last few years, we have conducted our business
activities in a domestic and international context
undergoing constant, fast-paced change. Thanks to the
guiding principles set out in the 2001-2006 Strategic Plan,
which centered on the core energy business, at IBERDROLA
we have not only adapted ourselves to this scenario but
also become one of the major driving forces behind such
change. Our strong determination in pursuing deregulation
in the European energy industry or an increase in crossborder interconnections -two of the mainstays for building
up the domestic market- and our unflagging commitment
to the development of renewable energy sources, which
are key to the achievement of sustainable development
and of a decisive reduction in the dependence on energy,
have made us leaders in the dissemination of a message
that is now endorsed by all public and private players in the
industry. We have thus proved that the best Company is
the one that adopts a forward-looking approach to the
needs of its environment.
THE ENERGY SECTOR
Europe
Spain
Tariffs
EUROPE*
From the regulatory point of view, 2006 was a year of
transition with respect to the European community
regulatory initiatives in the energy industry. During
this fiscal year, two new directives were published
regarding safety in electricity supply and investment in
infrastructure and regarding efficiency and energy
services.
In addition, the European Commission continued to
review the process of transposition of electricity and
gas directives in member States. In this regard, it
commenced proceedings against several countries
which have transposed such directives incorrectly
because they have retained regulated prices. Spain, as
well as Luxembourg, has not transposed either of the
two directives and has been sanctioned by the
Luxembourg Court of Justice in connection with the
gas directive.
The good performance of community-wide
trading in greenhouse gas emission rights
translated into a strong downward trend in
prices
In the environmental arena, the most notable event
was the good performance of community-wide trading
in greenhouse gas emission rights, in which prices
experienced a significant downward trend. Moreover,
the member States submitted to the European
Commission the emission rights National Allocation
Plans for the 2008-2012 period. Also, the Commission
continued to work on various regulations relating to
air quality and waste treatment.
The European Commission also presented the Green
Paper, a European strategy for sustainability,
competitiveness and safe energy, which has sparkled a
heated debate on the need to define a community
energy policy and in which various measures are
proposed in order to: guarantee safety in supply,
achieve a sustainable energy mix, fight against global
warming, put an end to vertical integration among
companies, foster innovation, etc.
For its part, the Competition Directorate published a
preliminary report with the results of the investigation
on the gas and electricity sectors that it started in
2005. The most serious problems detected refer to
market concentration, vertical integration among
companies, the low degree of integration in the single
market, the lack of transparency and the formation of
prices. In January 2007, the report containing the final
conclusions was made public.
European Parliament (Strasbourg)
(*) Additional information regarding European Community regulations may be found on the following websites (EU Law and European Commission-Energy):
http://eur-lex.europa.eu/es/index.htm; http://ec.europa.eu/energy/index_es.html
57
SPAIN**
During 2006, significant energy regulations were
approved that have changed various regulatory aspects in
the electricity sector, while existing regulations were
supplemented in the gas sector. During this fiscal year, the
Government approved several Royal Decree-Laws, among
which the following are especially noteworthy:
• Royal Decree-Law 3/2006, of February 24, which
modifies the mechanism for matching offers for the
sale and purchase of energy simultaneously submitted
to the daily and intra-daily production markets by
electricity industry players belonging to the same
group of companies. For purposes of settlements, this
Royal Decree-Law provides a provisional maximum
price of E42.35 MWh (average cost contemplated in
the tariff for energy generated under the ordinary
system, lower than the market price) for energy
acquired by distributors in the wholesale market by
means of the matching mechanism.
• Another measure contained in the above-mentioned
Royal Decree-Law is the provision for a reduction in
the value of CO2 emission rights allocated for no
consideration. The manner in which such reduction
will be carried out has not yet been implemented.
• Royal Decree-Law 4/2006, of February 24, whereby
the powers of the National Energy Commission
(Comisión Nacional de la Energía) (CNE) are modified
and the scope of the authorization of transactions
under Function 14 is expanded.
• On June 23, Royal Decree-Law 7/2006 was published,
which eliminates the Costs of Transition to
Competition (CTCs) system and provides that the
electricity tariff must be calculated based on the actual
cost of energy rather than on an estimated cost, which
has always been less than the market price.
In November, the Council of Ministers approved the
National Allocation Plan (Plan Nacional de Asignación)
(PNA) for CO2 emission rights for the 2008-2012 period,
which is pending approval by the European Commission.
It should be noted that Spain is the European Union
country that stands the farthest from compliance with the
environmental objectives formulated in the Kyoto
Protocol.
Significant energy regulations were
approved that have changed various
aspects in the domestic electricity sector
Furthermore, the Government approved new regulations
providing for the creation of the Iberian Electricity
Market (Mercado Ibérico de la Electricidad) (MIBEL),
establishing that, during the second half of 2006,
distributors must acquire 5% of their energy needs in
the forward market managed by the Portuguese portion
of MIBEL. This percentage has been increased to 10% for
the needs corresponding to the first half of 2007, and
the International Agreement relating to the creation of
MIBEL has been published.
In the gas sector, in addition to the approval of the
orders on compensation, tariffs, usage charges and fees
for 2006, of note is the amendment of the Regulations
for the Technical Management of the System [Normas de
Gestión Técnica del Sistema] and the replacement of the
chronological system used for the distribution of storage
capacity with a system for administrative distribution
among agents.
Finally, the Government approved and sent two Bills to
Congress for further processing, each providing for the
amendment of the Electricity Sector Law and of the
Hydrocarbons Law, in order to conform them to
European community directives. These significant
reforms are expected to be published during the first
half of 2007.
58
THE ENERGY SECTOR
TARIFFS**
Throughout 2006, tariffs in the electricity industry
increased by 4.48% in January and by an additional 1.38%
in July. These increases were not sufficient to cover system
costs, as actual generation prices were much higher than
those provided for in the calculation of the tariffs. This
was due to an increase in primary energy prices and low
rainfall and drought, among other reasons.
In the regulated market, tariffs rose in 2006 owing to a
14% increase in the cost of raw materials. The impact of
the increase varied from one type of customer to another:
it came to 4% for homes and 11% for industries. In the
deregulated market, usage charges were, in general, down
1.3% from 2005. Also worthy of note is the introduction
in 2006 of new interruptible usage charges, transit
charges and access charges for periods of less than one
year.
Electricity tariff increases were not
sufficient to cover system costs
As a result, the deregulated market took a step backwards
due to its impossibility of competing with the tariffs, and
a new tariff deficit was generated for the electricity sector
as a whole, the recovery of which in the next few years has
once again been recognized by the Government.
During 2006, the natural gas sector was a driver of the
deregulation process through the elimination of tariffs for
large consumers, who will now be served in the
deregulated market.
(**) Additional information on domestic regulations and changes in tariffs can be found on the website of the National Energy Commission (Comisión Nacional de la
Energía) (CNE): http://www.cne.es/cne/Legislacion?id_nodo=34&&accion=0&id_materia=5&keyword=&auditoria=F
59
Profitability
We are one of the electricity companies that has
created the most value for its shareholders. Since
the inception of the Strategic Plan, IBERDROLA has
created value for shareholders in an amount
exceeding 20,000 euros, and has compensated its
shareholders with over 4,000 euros, making it the
leading European utility in terms of Total
Shareholder Return (TSR), which amounts to 179%
over the 2001-2006 period. The positive stock
market performance of our shares is the fruit both
of the operational and economic/financial
performance of the Company and of the growing
credibility of its management team, which was
not only able to design a Strategic Plan that set
the course that would later be followed by other
Spanish electricity companies, but also managed
to achieve the ambitious targets set out therein
ahead of schedule. We have thus shown that the
best Company is the one that makes it
shareholders great.
ECONOMIC/FINANCIAL INFORMATION AND THE STOCK MARKET
Macroeconomic environment
Financial management of the IBERDROLA Group
Most noteworthy comments on the results of IBERDROLA Group
The stock market
MACROECONOMIC ENVIRONMENT
Despite strong volatility in the prices of raw materials, the
international economy grew 5.1% in 2006, as against
4.6% the year before. Once again this year, the main
drivers of such economic growth were the United States
(3.3%) and China (10.7%), while the contribution of the
Euro zone and Japan was smaller (+2.7% and 2.4%,
respectively). Spain reduced its growth differential with
the Euro zone to about 1%, after growing about 3.7%.
Within this context, the United States Federal Reserve
continued to raise the official interest rate from its initial
4.25% to 5.25%, while the European Central Bank raised
its reference interest rate on five occasions, to 3.50%. This
lower interest rate differential led to the euro regaining in
2006 most of the ground it had lost with respect to the
dollar, standing at 1.3170, as compared to 1.1797 at the
end of 2005.
The Latin American economy also grew (up 4.7%) thanks
to the dynamism of world trade and raw materials, which
have spawned greater optimism and confidence among
emerging market investors. Both Brazil and Mexico
continued to grow, by 2.7% and 4.6%, respectively.
Furthermore, the Brazilian real and the Mexican peso
remained very stable with respect to the dollar,
underpinned by significant foreign currency inflows.
Company to take advantage of low interest rates). In
addition, the average life of its debt has remained at
around five years. Thus, despite the rise in official rates in
the OECD countries and the high price of money in Brazil,
this management allowed the Company to cut the cost of
its debt from 4.55% in 2005 to 4.41% in 2006.
FINANCIAL MANAGEMENT OF THE IBERDROLA GROUP
Throughout 2006, IBERDROLA continued with its policy
of diversifying its sources of financing, both in capital and
banking markets and geographically (Europe and Latin
America).
IBERDROLA continued with its policy of
diversifying its sources of financing in the
European and Latin American capital and
banking markets
IBERDROLA made nine private placements in 2006 for an
aggregate amount of 1,675 million euros through the
Euro Medium Term Note Program (EMTN). At year-end,
the outstanding balance of this program was 5,581
million euros, out of a maximum amount of 10,000 euros.
Within this macroeconomic environment, financial
management at IBERDROLA followed the guidelines
established in the Strategic Plan, focused on reducing
volitility in financial expenses, increasing liquidity levels
and extending the average life of debt.
Domestic and European commercial paper programs
(ECP) enabled the Company to secure flexible short-term
financing at a cost in line with the interbank market. The
overall volume issued last year was 4,418 million euros,
leaving the outstanding balance at year-end at
1,267 million euros.
IBERDROLA has reduced the interest
expense on its debt from 4.55% in 2005 to
4.41% in 2006
Particularly worthy of mention is the agreement with the
European Investment Bank to secure a loan for a total of
450 million euros to be used to finance the development
of 31 wind farms and two mini-hydroelectric plants in
Spain.
The IBERDROLA Group thus ended 2006 with 58% of its
debt at a fixed interest rate, plus an additional 9% at a
capped rate (debt with a maximum cost that enables the
At year-end, IBERDROLA externalized to the financial
community the 2005 rate shortfall, amounting to
1,326 million dollars.
61
In the international area, the Company reached an
agreement under which it is to receive 1,700 million
dollar financing from the leading Mexican banks in order
to restructure the financial debt of investments in that
country and lengthen the maturities thereof to a
maximum of 10 years.
• Gross margin was 5,800 million euros, up 17.3% from
2005. This improvement was the result of the growing
contribution of the domestic energy business
(excluding renewable energy), which was up 16.1%
and the renewable and international businesses, which
account for 38.1% of the overall growth in gross
margin (see chart 12).
MOST NOTEWORTHY COMMENTS ON IBERDROLA’S
CONSOLIDATED RESULTS
The comments below refer to the IBERDROLA Group’s
consolidated financial statements for fiscal years 2006 and
2005 (see tables at the end of this chapter). The chapter
on supplemental information (page 192) contains
information relating to the last five fiscal years. In
addition, the consolidated annual financial statements
and the annual financial statements of IBERDROLA, S.A.
are presented in greater detail under 2006 Legal
Information and on the Company's website
(www.iberdrola.com).
CHART 12
Gross margin by business line
690.1
(E million)
929.4
695.6
3,485.3
5,800.4
+7.2%
+25.1%
+24.8%
+17.3%
+16.1%
The following were the most salient aspects of the
IBERDROLA Group’s consolidated results as of the end of
fiscal year 2006:
• The Group’s net sales were 11,017 million euros in
2006, down 6.1% from 2005, when strong growth in
the international (up 13.2%) and non-energy
(up 19.0%) businesses was offset by a drop in the
domestic energy business (down 15.0%). The sales
figure breaks down as shown in Chart 11.
CHART 11
Domestic*
Renewable
(excl renewable)
International
Non-energy
Gross margin
(*) Generation+supply+gas+distribution
• Consolidated gross operating income (EBITDA) grew
15.2% to 3,890 million euros. A 21.9% increase in net
operating expenses (see chart 13) must be added to
the above-mentioned changes in gross margin.
Net sales
(%)
Domestic energy: 64,3%
CHART 13
EBITDA by business line
International: 20,9%
(E million)
425.0
709.6
Non-energy: 14,8%
556.6
2,198.3
Revenues from the domestic energy business fell 15%
owing primarily to lower sales in the supply business,
eliminations in consolidation figures due to the existence
of a bilateral agreement between the generation and
supply businesses (367 million euros) and the effects of
Royal Legislative Decree 3/2006 on the distribution
business. Nevertheless, the renewable energy business
achieved growth of 24.8% in net sales.
62
3,889.7
+5.3%
+27.7%
+19.5%
+15.2%
+12.6%
Domestic
Renewable
(excl renewable)
International
Non-energy
EBITDA
• Net operating income (EBIT) was 2,655 million
euros, up 17.3% from 2005. The depreciation,
amortization and provisions entry increased by 10.7%
(119.8 million euros). Such increase is mainly due to
the following:
-
The depreciation and amortization entry increased
6.8% to 1,033.7 million euros. Such increase is
primarily due to the new facilities brought into
service since the end of 2005.
-
The provisions entry increased 54.3 million euros
to 201.5 million euros, including non-recurring
provisions intended for future efficiency
improvements. 88% of total provisions are
non-recurring.
Company EBITDA and EBIT were up 15.2%
and 17.3%, to 3,890 million euros and
2,655 million euros, respectively
• Financial results were -519 million euros, 13.9%
more than 2005. The increase is basically explained
by a 22.8% increase in financial expenses, the impact
of the rate shortfall and the financing of the industry’s
CO2 rights during the period, resulting in a greater
average debt balance, 2,541 million euros, than in
2005.
• Results of companies consolidated using the
equity method was up by 34.7 million euros to
69.1 million euros. The greater portion of these
results was provided by financial participations,
among which the contribution of Gamesa is worth
noting, which was partially offset by companies
withdrawn from the scope of consolidation, such as
Cementos Portland.
• Income on non-current assets assets was
181.6 million euros, derived from the sale of real estate
assets (142.9 million euros) and of equity interests in
companies in the technology sector (38.7 million
euros).
• Profit before taxes up 21.9% to 2,386 million euros.
The effective tax rate is 29.1%, above the 28.3%
recorded 2005. The above- mentioned effective rate
includes the estimated impact of lower deductions as a
result of the reduction in the marginal corporate
income tax rate from 35% to 30%.
IBERDROLA’s net profit grew by 20.1%, to
1,660 million euros
• Net profit was 1,660 million euros, representing a
20.1% increase over 2005 and exceeding the goal set
for the end of the 2001-2006 Strategic Plan,
established at 1,600 million euros. Table 11 shows the
contributions to consolidated net income by business
line.
TABLE 11
Contribution to consolidated net income by business line
(E million)
Business line
Domestic energy bus.
International business
Non-energy business
Total
2006
956.3
321.4
382.6
1,660.3
2005
883.9
192.5
305.6
1,382.0
% change
8.2
66.9
25.1
20.1
As regards the IBERDROLA Group’s balance sheet as of
the end of fiscal year 2006, the following deserve
mention:
• IBERDROLA’s balance sheet reflected total assets of
33,061 million euros. Worth noting is its continued
financial strength despite the investments made in the
period (2,899 million euros).
63
TABLE 13
IBERDROLA’s investments during the year
totaled 2,899 million euros, 64% of which
were made in Spain
Financial leverage in 2006
Gross debt
Cash (including Temporary
Financial Investments)
Capitalized derivatives
Assets for sale
Adjustment CNE settlements
Adjusted net debt
Leverage*
• Fixed assets: investments during fiscal year 2006
totaled 2,899 million euros. The breakdown of
investments is shown in table 12.
TABLE 12
Investments
Spain
Generation
Renewable energy
Distribution
Other
Mexico
Generation
Distribution
South America
Generation
Distribution
Other international
TOTAL
2006
1,853
449
452
548
404
178
162
16
133
8
125
735
2,899
(e millions)
%
63.9%
6.1%
705
98
132
299
13,119
55.4%
(e million)
2005
9,415
13,111
809
90
0
0
12,211
56.5%
(*) Without the effect of the rate shortfall, adjusted leverage stood at 54.3% as of
December 2006, compared to 53.6% as of December 2005.
• Net working capital was 1,393 million euros,
1,313 million more than the 80 million posted as of
the end of fiscal year 2005. This is primarily due to an
increase in current assets affected by an increase in
inventories and receivables, and a reduction in current
liabilities due to changes in provisions and accounts
payable.
4.6%
• Funds from operations as of December 2006 stood at
2,645 million euros, up 13% over the prior year.
25.3%
100%
• Share capital as of December 31, 2006 was comprised
of 901,549,181 bearer shares with a par value of 3 euros
each. An interim dividend of 0.45 euro per share, to be
charged to fiscal year 2006, was paid on January 2,
2007.
• Adjusted net financial debt as of the end of the fiscal
year totaled 13,119 million euros (see table, 13) and
financial leverage stood at 55.4%. Taking into account
the financing of the rate shortfall, which as of
December 2006 amounted, in the case of
IBERDROLA, to 572 million euros, adjusted net
financial debt would be 12,547 million euros and
adjusted leverage would stand at 54.3%.
Of particularly relevance is the decrease in the
Company’s financial cost, which at December 2006
stood at 4.41%, 14 basis points lower than at the end
of 2005, despite rising interest rates.
64
2006
10,567
14,353
In the last quarterly review conducted by Moody’s, the
Company’s liquidity maintained its “Excellent” rating
awarded in June 2005.
TABLE 14
Consolidated Income Statement*
(e million)
NETSALES
Procurement
Emission allowances
GROSS MARGIN
EMISSION ALLOWANCES
NET OPERATING EXPENSES
Net personnel expenses
Personnel
Work on fixed assets
Net External Services
External services
Other operating revenue
TAXES
EBITDA
Amortization, depreciation and provisions
EBIT
TOTAL FINANCIAL REVENUES
Financial revenues
Positive exchange rate differences
Capitalized financial expenses
TOTAL FINANCIAL EXPENSES
Financial debt expense
Negative exchange rate differences
Pension funds
Change in provisions for short-term financial investments
Other financial expenses
Results from companies consolidated carried by the equity method
Results from non-current assets
PROFIT BEFORE TAXES
Corporate income tax
Minority interests
NET PROFIT
(*)
2006
11,017.4
(4,966.4)
(250.7)
5,800.3
30.6
(1,804.9)
(1,000.6)
(1,173.7)
173.1
(804.3)
(1,008.9)
204.6
(136.3)
3,889.7
(1,235.2)
2,654.5
368.3
267.6
15.0
85.7
(887.3)
(655.7)
(24.1)
(31.2)
(2.7)
(173.6)
69.1
181.6
2,386.2
(695.3)
(30.6)
1,660.3
2005
11,738.3
(6,623.1)
(168.5)
4,946.7
134.4
(1,480.8)
(805.6)
(979.8)
174.2
(675.2)
(862.9)
187.7
(222.7)
3,377.6
(1,115.4)
2,262.2
266.7
169.8
36.7
60.2
(722.3)
(580.4)
(13.7)
(24.8)
(12.5)
(90.9)
34.4
116.8
1,957.8
(553.3)
(22.5)
1,382.0
% change
(6.1)
(25.0)
48.8
17.3
(77.2)
21.9
24.2
19.8
(0.6)
19.1
16.9
9.0
(38.8)
15.2
10.7
17.3
38.1
57.6
(59.1)
42.4
22.8
13.0
75.9
25.8
N/A
91.0
100.9
55.5
21.9
25.7
36.0
20.1
Some items have been grouped to facilitate a summary of the information contained in these statements. In addition, the income statement is presented
analytically. Detailed information is given in 2006 Legal Information, and Supplemental Information (pages 192 through 196) includes information on the last five
fiscal years.
65
TABLE 15
Balance Sheet*
(e million)
FIXED ASSETS
Tangible fixed assets
Intangible fixed assets
Long-term financial investments
DEFERRED TAXES
NON-CURRENT RECEIVABLES
CURRENT ASSETS
Nuclear fuel
Inventories
Debtors and other accounts receivable
Tax credits
Short-term financial investments
Prepaid expenses
Cash and cash equivalents
TOTAL ASSETS
SHAREHOLDERS’ EQUITY
Capital stock
Reserves and other
Profit and los
Interim dividends
Minority shareholders
LONG-TERM PROVISIONS
DEFERRED INCOME
FINANCIAL DEBT
OTHER LONG-TERM DEBT
OTHER SHORT-TERM DEBT
RECEIVABLES FROM GROUP & AFFILIATES
TOTAL LIABILITIES
2006
25,190
21,566
900
2,724
1,222
833
5,816
238
1,192
2,791
602
289
704
33,061
2006
10,567
2,705
6,459
1,660
(406)
149
1,836
818
14,352
847
4,423
218
33,061
2005
22,972
20,493
849
1,630
1,356
1,469
4,682
212
848
2,325
420
643
26
208
30,479
% change
2,218
1,073
51
1,094
(134)
(636)
1,134
26
344
466
182
(354)
(26)
496
2,582
2005
9,415
2,705
5,512
1,382
(331)
147
1,379
676
13,111
958
4,602
338
30,479
(e million)
% change
1,152
947
278
(75)
2
457
142
1,241
(111)
(179)
(120)
2,582
(*) Some items have been grouped to facilitate a summary of the information contained in these statements. In addition, the income statement is presented
fiscal years.
66
TABLE 16
Results by business line. FY 2006*
(e million)
Domestic
Energy
Net Sales
7,083.2
Procurement
(2,651.6)
Emission allowances
(250.7)
GROSS MARGIN
4,180.9
EMISSION ALLOWANCES
30.6
NET OPERATING EXPENSES
(1,339.8)
Net Personnel Expenses
(796.6)
Personnel
(906.0)
109.4
Net external services
(543.2)
External services
(689.0)
Other operating revenues
145.8
TAXES
(116.8)
EBITDA
2,754.9
Amortization, depreciation & provisions
(1,011.2)
EBIT
1,743.7
Financial result
(395.3)
Results from companies consolidated using the equity method
0.6
104.1
PROFIT BEFORE TAXES
1,453.1
Corporate income tax & minority interests
(496.8)
NET PROFIT
956.3
International
Business
2,298.6
(1,369.2)
929.4
(212.3)
(77.8)
(94.0)
16.2
(134.5)
(171.1)
36.6
(7.5)
709.6
(149.1)
560.5
(114.1)
2.4
(1.8)
447.0
(125.6)
321.4
NonEnergy
1,635.6
(945.5)
690.1
(253.1)
(126.4)
(173.8)
47.4
(126.7)
(148.8)
22.1
(12.0)
425.0
(74.9)
350.1
(9.5)
66.2
79.3
486.1
(103.6)
382.5
International
Business
2,031.1
(1,288.4)
742.7
(182.9)
(71.0)
(85.1)
14.1
(111.9)
(143.9)
32.0
(4.0)
555.8
(184.4)
371.4
(99.8)
1.1
(16.0)
256.7
(64.2)
192.5
(million e)
NonEnergy
1,375.0
(731.0)
644.0
(231.2)
(121.1)
(173.8)
52.7
(110.1)
(128.5)
18.4
(9.1)
403.7
(74.5)
329.2
(4.6)
39.8
79.5
443.9
(138.2)
305.7
Results by business line. FY 2005*
Net Sales
Procurement
Emission allowances
GROSS MARGIN
EMISSION ALLOWANCES
NET OPERATING EXPENSE
Net Personnel Expense
Personnel
Net external services
External services
Other operating income
TAXES
EBITDA
Amortization, depreciation & provisions
EBIT
Financial results
Companies consolidated using the equity method
PROFIT BEFORE TAXES
Corporate income tax & minority interests
NET PROFIT
Domestic
Energy
8,332.1
(4,603.6)
(168.5)
3,560.0
134.4
(1,066.7)
(613.4)
(720.9)
107.5
(453.3)
(590.6)
137.3
(209.7)
2,418.0
(856.5)
1,561.5
(351.1)
(6.4)
53.2
1,257.2
(373.3)
883.9
(*) Some iitems have been grouped to facilitate a summary of the information contained in these statements. In addition, the income statement is presented
fiscal years.
67
THE SECURITIES MARKET
Stock market performance
CHART 14
For the fourth straight year, the leading international
stock markets have exhibited an upward trend, with an
average overall rise of 20% in 2006, owing primarily to
ample liquidity, an economic environment of global
growth, the large number of corporate transactions and
an exceptional situation of corporate profits and strength
which have boosted investor interest in the equities
markets.
Within this context, the Spanish stock market ended a
brilliant fiscal year, in which the market broke all records.
The Ibex-35 rose 31.8% over the last twelve months,
exceeding the accumulated gains of the leading European
indices (see chart 14). The primary factors that helped
make 2006 one of the best stock market years ever were:
the strong increase in domestic corporate activity, both in
profits and in corporate transactions.
IBERDROLA shares rose 43.4% in 2006 and
148% since the inception of the Strategic
Plan
The Ibex-35 in 2006
(Compared with the leading European stock exchange indices)
(%)
31.8%
22.0%
17.5%
15.1%
10.7%
Ibex-35
DAX
CAC-40
Euro-Stoxx 50
FTSE-100
IBERDROLA on the Stock Exchange
IBERDROLA shares rose 43.4% in 2006 as against the
31.8% rise of the Ibex-35 and the15.1% gain of the
Euro-Stoxx 50. Since the commencement of the
Strategic Plan, the Company’s securities have
outperformed those of other European electricity
companies, with a 148% increase, compared with 55%
of the Ibex-35 and the Euro-Stoxx Utilities, respectively,
and the 14% drop of the Euro-Stoxx 50 (see chart 15).
CHART 15
IBERDROLA performance compared with Ibex-35, Euro-Stoxx Utilities and Euro-Stoxx 50
(%)
(Base 100: 12-30-2000)
300
+148%
280
260
240
220
200
180
Euro-Stoxx Utilities: +55%
160
Ibex 35: +55%
140
120
100
Euro-Stoxx 50: -14%
80
60
40
dec-00
68
jun-01
nov-01
march-02 jul-02
nov-02
febr-03
jun-03
oct-03
febr-04 may-04
sept-04 jan-05
may-05
aug-05
dec-05 june-06
dec-06
TSR climbed to 47.3% in 2006, with an
accumulated increase of 179% since
the commencement of the Strategic Plan
Total shareholder return (TSR), which includes dividends
paid, climbed to 47.3% in 2006, close to 12 percentage
points more than the Ibex-35. Furthermore, the
Company’s TSR has already grown by 179% since the
inception of the Strategic Plan, compared to gains of 70%
and 76% for the Ibex-35 and the Euro-Stoxx Utilities,
respectively, and the 2% drop in the Euro-Stoxx 50
(see chart 16).
The Company achieved its highest listing price ever in
2006, reaching 38.67 euros per share, and its stock
market capitalization was 29,859 million euros as of yearend (up 43.4%). Average per-share change during the year
was 29.42 euros.
As in prior years, IBERDROLA shares have been among the
most widely traded issues on the Spanish market, with an
average daily trading volume of 7.7 million shares, which
implies an annual capital stock turnover of 216% (see
table 17). IBERDROLA shares were suspended from
trading on November 28, 2006 as a result of the
agreement filed for the amicable combination of the
Company with ScottishPower.
CHART 16
Total shareholder return since the commencement of the
Strategic Plan
(%)
179%
76%
IBERDROLA
Euro-Stoxx Utilities
70%
Ibex-35
-2%
Euro-Stoxx-50
TABLE 17
IBERDROLA stock market data
Shares admitted to trading (no. of shares)
Stock market capitalization (E million)
Share price (E)
High
Low
Average
Fiscal year end (E)
Earnings per share (E)
Dividend yield (%)
Total shareholder return (%)
P/E ratio (multiple)
Total traded volume (shares)
Average daily volume (shares)
Total amount traded (E million)
Average daily amount traded (E million)
Capital stock turnover as of fiscal year end (%)
2006
901,549,181
29,859
2005
901,549,181
20,817
2004
901,549,181
16,859
38.67
23.79
22.34
18.26
29.42
20.97
33.12
23.09
1.84
1.53
3.8
4.1
47.3
27.6
18.0
15.1
1,944,858,507 1,748,112,152
7,656,923
6,828,563
57,222.65
36,134.33
225.29
141.15
215.7
193.9
18.83
15.15
16.88
18.7
1.33
4.3
23.6
14.1
1,598,636,527
6,369,069
26,975.71
107.47
177.3
2003
901,549,181
14,127
2002
901,549,181
12,036
15.98
15.64
12.86
11.41
14.76
13.74
15.67
13.35
1.18
1.07
4.6
4.0
22.0
-4.7
13.3
12.5
1,658,847,723 1,227,726,954
6,635,390
4,910,908
24,478.64
16,872.47
97.91
67.49
184.0
136.2
69
The profits achieved by IBERDROLA in fiscal year 2006
allowed the Board of Directors to propose to the
shareholders acting at the General Shareholders’ Meeting
the distribution of a dividend in the amount of 1.043 euros
per share which, added to an attendance premium of
0.02 euro per share, entails total compensation of
1.063 euros per share. This represents a 20.1% increase over
2005 (see table 18).
The Company’s dividend yield was 3.8% of the listing price at
the end of fiscal year 2005, among the highest for Spanish
listed companies. Furthermore, IBERDROLA’s earnings per
share stood at 1.84% euros, 20% more than in 2005.
The proposed dividend amounts to
1.063 euros per share (including an
attendance premium of 0.02 euro per
share), 20.1% more than in 2005
IBERDROLA paid a 0.45 per share interim dividend in
January 2007, with an additional amount of 0.593 euros per
share still to be paid -following approval by the
shareholders at the General Shareholders’ Meeting,
according to the proposed allocation of income- as a
supplemental dividend in July 2007.
The pay-out ratio (the percentage of profits allocated to
dividend payments) stood at 56.6%, a level similar to that of
prior years.
Stock Exchange Building (Madrid)
As of year-end, the P/E ratio, the ratio between market price
and earnings, was 18 (see table 17) reflecting the upside
potential of IBERDROLA’s shares based on the performance
of its business and its profits.
TABLE 18
Gross and net dividend performance
Total dividend (*) (**) (millions) (E)
Interim (January)
Supplemental (July)
Dividend per share (***) (E)
Interim (January)
Supplemental (July)
% over par
Pay-out (%)
2006
940.32
405.66
534.66
1.063
0.4500
0.5930
34.8
56.6
2005
797.87
330.83
467.04
0.8850
0.3670
0.5180
29.5
57.7
2004
692.39
293.83
398.56
0.7680
0.3260
0.4420
25.6
57.2
2003
605.75
257.32
348.43
0.6719
0.2860
0.3859
22.4
57.1
2002
549.95
234.08
315.87
0.6100
0.2600
0.3500
20.3
57.1
(*) Pending approval of Proposed Allocation of Income at the General Shareholders’ Meetings.
(**) The total amount will be increased by an amount sufficient for the shares derived from the increase in capital stock carried out as a result of the ScottishPower
transaction to receive the supplemental dividend.
(***) Includes a 0.02 euro-premium for attending the General Shareholders’ Meeting.
70
Dividend Reinvestment Plan (DRP)
In 2006 IBERDROLA launched a Dividend Reinvestment
Plan, whereby it offers its shareholders (except for United
States residents) the possibility of reinvesting dividends in
Company shares and increasing their interest therein.
This initiative constitutes an attractive savings plan for
IBERDROLA’s shareholders, given the strength of the
business, the low volatility in share value and the high
dividend yield it offers.
The Dividend Reinvestment Plan was put in place on the
occasion of the payment of the supplemental dividend for
fiscal year 2005 (on July 3, 2006) and continued on
occasion of payment of the interim dividend for fiscal year
2006 paid on January 2, 2007.
IBERDROLA has launched a Dividend
Reinvestment Plan, which has attracted
more than 22,000 shareholders of the
Company
At each of the dividend payments, over 22,000 shareholders
took advantage of the Plan. The price of the shares
delivered upon payment of each dividend under the Plan
was 25.77 euros and 32.67 euros, respectively, according to
the exchange ratio certified by the Bilbao Stock Exchange.
71
Strength
As a result of an investment effort without precedent in the
Spanish electricity industry, we are one of the companies
with the most growth in Spain over the last five years.
IBERDROLA has successfully developed a Strategic Plan that
has enabled us to practically double the IBERDROLA Group’s
installed capacity, reaching 30,400 MW (26,000 MW in Spain).
This increase has been possible owing to the entry into
operation of electric power plants that use the cleanest and
most efficient technologies available today: gas combined
cycle plants (5,600 MW already under management) and
renewable energy plants, primarily wind farms. As a result,
we have also managed to almost double our electric power
production, which has grown to more than 95,000 million
kWh (71,500 million kWh in Spain), thus contributing
decisively to guaranteeing the supply of energy. In addition,
we have become the second-largest gas supplier in Spain,
gaining a 15% share of total demand in the deregulated gas
market in 2006. We have thus demonstrated that the best
Company is the one that is most deeply committed to the
development of its country.
THE DEREGULATED BUSINESS
Generation
Supply
Gas
In 2006, IBERDROLA’s deregulated business in Spain
(which includes the generation and supply of electricity
and gas) posted gross operating profits (EBITDA) of
2,043 million euros (up 61%) and consolidated
earnings of 948 million euros after taxes, which entails
a 57% contribution to the Group’s net profits. The
value of total assets in this business comes to
The deregulated business contributed 57%
to the IBERDROLA Group’s results
Generation
Production equipment and operation of the system
IBERDROLA’s investments in generation (449 million
euros) in 2006 have made it possible to enhance the
balance and diversification of the Company’s production
structure.
IBERDROLA increased its installed capacity under the
ordinary system by more than 820 MW, reaching
21,128 MW, which represents a 4% rise as compared to
fiscal year 2005. This increase is due to the entry into
service of the combined cycle plant at Escombreras, with a
capacity of 800 MW, and to the expansion of capacity at
several generation plants.
Thanks to the greater contribution provided by clean
technologies, IBERDROLA’s gross production under the
ordinary system came to 61,008 million kWh in 2006,
up 6.9% over the previous year. This figure accounts for
27.7% of all electricity generated under the ordinary
regime in the Spanish mainland system. Energy demand
stood at 56,510 million kWh, 8.8% more than in 2005
(see table 19).
IBERDROLA’s nine combined cycle
plants in Spain produced more than
15,000 million kWh, 7.4% more than in 2005
The nine gas combined cycle plants generated
15,172 million kWh (up 7.4%) and the production from
hydroelectric power plants rose to 11,971 million kWh
(up 54%).
TABLE 19
IBERDROLA’s energy balance under the ordinary system
(Million kWh)
Gross production
Hydroelectric
Combined cycle plants
Nuclear
Fuel oil
Coal
Net production
Power used in pumping
Energy demand
2006
61,008
11,971
15,172
26,354
2,081
5,430
58,815
2,305
56,510
2005
57,092
7,731
14,124
24,247
3,596
7,394
54,924
2,974
51,950
2006/2005 (%)
+6.9
+54.9
+7.4
+8.7
-42.1
-26.6
+7.1
-22.5
+8.8
% of mainland Spain
27.7
48.3
23.9
43.8
35.6
8.2
27.8
42.0
27.4
73
These figures are in stark contrast with the significant
reduction in the joint contribution of coal-fired plants
(5,430 million kWh) and fuel-oil plants (2,081 million
kWh), whose production decreased to 26.6% and 42.1%,
respectively. On the other hand, the Company’s
hydroelectric facilities turned in an excellent performance,
with 80% availability during the fiscal year.
At year-end, the cogeneration plants in which the Company
has an interest generated 3,499 million kWh, of which 2,584
million kWh are attributable to it (up 23.1% over 2005).
IBERDROLA in the wholesale electricity market
The main factors characterizing the operation of the
wholesale electricity market in 2006 were demand
growth (up 2.5%), low rainfall until September (with a
0.62 cumulative index for IBERDROLA), followed by a
strong increase in the last quarter of the year
(a 0.99 index), and the entry into service of the new
combined cycle plants (the Company already has
4,800 MW in operation, representing a 31% share),
which have become the leading technology in the
domestic production market.
Moreover, the approval of Royal Decree-Law 3/2006
caused a regulatory distortion in the production market
that resulted in part of the energy previously supplied
in the daily market being channeled to the operation
markets managed by the System Operator.
Combined cycle plant at Escombreras (Murcia)
The Company’s production structure under the ordinary
system in 2006 was as follows: 24.9% combined cycle
plants; 19.6% hydroelectric plants; 43.2% nuclear plants;
3.4% fuel-oil/gas plants; and 8.9% coal-fired plants.
In addition, in 2006 IBERDROLA confirmed its position as
one of the largest co-generation companies in Spain, with
an attributable operational capacity of 404 MW,
corresponding to 29 cogeneration plants in which the
Company has an interest and which total a capacity of
549 MW (up 162 MW). During the fiscal year, the
Company brought into operation three waste treatment
plants: Fonz, with 7.4 MW, and Monzón, with 14.8 MW, in
Huesca; and Fudepor, with 14.8 MW, in Murcia.
Prices in the wholesale electricity market (an average
price of 50.5 euros/MWh in 2006) performed in
accordance with the high costs of fuel (record prices for
Brent crude oil) and of CO2 emissions, as well as with
the increase in hydroelectric production during the last
quarter of the year. This performance was similar to that
of other European countries, such as France
(49.3 euros/MWh) and Germany (50.8 euros/MWh).
IBERDROLA’s objective in the wholesale market has
been the creation of value through the maximization of
the gross margin resulting from the Company’s overall
transactions for the purchase and sale of energy.
In this context, total production sold by IBERDROLA
was 62,999 million kWh, for the amount of 4,162
million euros, at a final average price of 66.07
euros/MWh, which was 5.4% higher than the average
market price. The Company secured a 25% share of all
energy sold and a 26.4% share of total revenues (see
table 20).
TABLE 20
IBERDROLA in the Spanish wholesale electricity market in 2006
Markets + Bilateral
Supplemental services
Guaranteed capacity
Total production market
74
Energy
million kWh
51,372
11,627
62,999
IBERDROLA/System
%
23.3
37.4
25.0
Revenues
E millions
2,902
881
379
4,162
IBERDROLA/System
%
23.7
37.0
32.7
26.4
In 2006, the energy sold by IBERDROLA in the markets
managed by OMEL came to 51,372 million kWh,
representing a 23.3% market share. Transactions in
supplemental services markets involved the sale of
11,627 million kWh, with fees of 881 million euros,
which translated into a 37% share. These figures, which
are well above our overall market share, are the result of
capitalizing on the characteristics of the Company’s
generation facilities as well as on the opportunities
offered by real-time markets.
With regard to compensation for guaranteed capacity,
IBERDROLA collected 379 million euros, or 32.7% of
the total brought in by generation plants in mainland
Spain, which shows the significant role that the
Company’s hydroelectric facilities and combined cycle
plants play in guaranteeing supply.
With respect to the purchase of energy in the wholesale
market for IBERDROLA’s users, the Company bought
85,473 million kWh. Of these purchases, 77,997 million
kWh were allocated to users in the regulated market,
6,782 million kWh to eligible users and 694 million
kWh to exports.
Furthermore, in the new compensation system for
facilities under a special regime, which encourages
them to resort to the production market, IBERDROLA
sold 6,780 million kWh, up 59% over 2005.
Energy trading in Europe
In 2006, IBERDROLA handled the purchase and sale of
energy and by-products in Spain, Portugal, France,
Switzerland, Germany, Austria, Belgium, the Netherlands
and Italy, for a total of 13,963 million kWh.
The Company sold 14,000 million kWh in
transactions for the purchase and sale of
energy in Europe
Yet another year, IBERDROLA’s presence in the French
market was essential to maximize the value of its
generating assets in Spain. The Company participated in
all of EDF’s capacity auctions, acquiring the right to
provide up to 22 million kWh in the four auctions
organized in 2006. The Company already had 162 million
kWh corresponding to auctions that took place in 2005.
In addition, it provided electric power options and
products for a total amount of 995 million kWh to RTE
and GRD, the managers of the French electricity
transmission and distribution networks, in order to cover
network losses therein. The Company is also negotiating
in France the sale of 193 million kWh associated with UK
environmental products.
In 2006, IBERDROLA continued with its operations in
the futures division and its daily operations in
Powernext, the French organized market, in which the
total volume traded was 147 million kWh and 1,381
million kWh, respectively. Additionally, the Company
commenced operations in the Italian market (IPEX), in
which it sold 268 million kWh, and continued to be
present in the German (EEX) and Dutch (APX) electricity
markets, in which the volume traded came to 119
million kWh and 27 million kWh, respectively.
Of note is the startup of the Operador del Mercado
Ibérico Portugués (OMIP), in which IBERDROLA acquired
1,300 million kWh as a distributor, as well as the
Company’s participation in RWE’s virtual capacity
auctions, in which it was awarded 77.36 million kWh for
2007.
IBERDROLA and the CO2 emissions market
The entry into effect of European trading in emission
allowances in January 2005 entailed the implementation
of a mechanism that is more flexible and efficient from
the economic point of view to reduce greenhouse gas
emissions.
Despite the low emission levels from the Company’s
plants (65% of gross production in Spain is CO2 free), the
low rainfall during the first nine months of 2006 required
IBERDROLA to resort to CO2 emission rights markets in
order to cover the deficit between emissions and allocated
rights.
During the fiscal year, IBERDROLA traded more than
3.3 million emission rights in various daily transactions,
both with European companies (through brokers) and in
organized markets, such as Powernext Carbon (Paris). In
addition, the Company signed agreements for the
purchase of 3.5 million credits with the Greenhouse Gas
Credit Aggregation Pool (GG-CAP) carbon fund, managed
by Natsource, and with the Fondo Español de Carbono,
managed by the World Bank. The value of such credits will
enable the Company to finance renewable energy projects
in developing countries.
75
IBERDROLA traded more than 3.3 million
emission rights in various daily transactions
and signed agreements with the GG-CAP
fund for the purchase of 3.5 million credits
These agreements will enable IBERDROLA to comply with
the commitments arising from the application of the
Kyoto Protocol at a cost significantly below current
trading levels in European markets.
Supply
Electricity and gas supply in Spain
The current high energy prices and the co-existence in
Spain of a deregulated market and a regulated tariff that
does not reflect changes in international costs puts a
brake on supply activities. This circumstance is a step
backwards in market deregulation, and therefore requires
the implementation by IBERDROLA of a supply policy
focused on profitability.
IBERDROLA’s supply policy focuses on
profitability
The regulatory provisions approved at the end of 2006
mark the beginning of a transition toward complete
deregulation, by means of a gradual passage from the
regulated to the deregulated market. However, the speed
of this process will vary based on the different user
segments, with the residential segment being the last one
to join the market.
This is why IBERDROLA’s supply policy focuses principally
on large consumers, although it is well-positioned for an
immediate response in the event that the opening of the
residential sector is accelerated. As regards industries and
businesses with higher consumption levels, the Company
carries out monitoring activities and provides customized
service through an agent specializing in both the energy
industry and industrial processes and the needs of
industrial users.
76
At year-end 2006, IBERDROLA had 480,441 users in the
deregulated electricity and gas markets, with electricity
sales of 6,518 million kWh and gas sales of 14,529 million
kWh. It should be noted that the gas area accounts for
more than 28% of the Company’s supply business
revenues in Spain, which is due to the fact that this area
has become a driving force and gas tariffs, unlike
electricity tariffs, reflect supply costs.
Activities in the deregulated markets of Portugal and
France
The deregulation of the Portuguese market is at a stage
similar to that in Spain and offers very limited business
opportunities. This has led to the formulation of a
supply policy that focuses on the profitability of the
business and on maintaining customer relationships
and providing ongoing advice to customers.
In Portugal, IBERDROLA has 222 electricity contracts
with industrial users, representing annual
consumption of 182 million kWh and a deregulated
market share of almost 3% of consumption in such
deregulated market.
The Company, which was the first Spanish company to
export gas to France through a pipeline, continued to
serve the wholesale and industrial gas market in 2006,
with an annual volume of 100 million kWh.
Gas supply
In 2006, IBERDROLA supplied 4.3 bcm (billion cubic
meters) of gas in Spain, which figure accounts for 15%
of total demand in the deregulated natural gas market
and confirms the Company’s position as the secondlargest supplier in Spain.
In 2006, IBERDROLA confirmed its position as
Spain’s second-largest gas company,
supplying 15% of total demand in the
deregulated gas market
In addition, the Company provided 20% of all imported
liquefied natural gas (LNG) (3.2 million tons) in 2006,
after bringing 101 LNG tanker shipments into Spain,
which were unloaded at regasification plants located in
Bilbao, Huelva and Sagunto.
IBERDROLA received the gas in accordance with the
provisions of the long-term supply contracts signed over
the last few years. In 2006, Nigeria LNG and Snohvit
started to make their deliveries, which added to those by
Sonatrach, ENI and GNA and to various purchases made in
the international spot market.
Along these lines, it should be emphasized that, in
anticipation of future needs, the Company has already
ensured for itself the overall receipt of 16.2 bcm
annually, of which more than 7 bcm will be allocated to
domestic supply and almost 9 bcm will go to Mexico and
Brazil.
In fiscal year 2006, IBERDROLA managed an overall
volume of 5.5 bcm of natural gas, taking into account all
of its business in international markets, which entails a
20% increase over the volume in 2005, which came to
4.6 bcm.
Especially noteworthy among the activities conducted by
the Company abroad in 2006 are trading operations and
the optimization of its gas supply, with sales of LNG
shipments in Europe and Asia, and exports through the
gas pipeline interconnection with France (Euskadour,
across the Basque Country, and Larrau, across the
Pyrenees).
LNG tanker LNG River Orashi
The gas imported by IBERDROLA during the fiscal year
came from six countries: Nigeria (43%), Algeria (28%),
Egypt (18%), Trinidad and Tobago (6%), Qatar (4%) and
Libya (1%). This diversity of sources provides a safe and
flexible mix and complies with current gas regulations, as
the main supplier does not provide more than 60% of the
total (see chart 17).
Finally, it is worth noting that the reliability of
IBERDROLA’s gas supply system was once again
recognized in 2006 by the Oil Products Strategic
Reserves Corporation (Corporación de Reservas
Estratégicas de Productos Petrolíferos) (CORES), which
certified that the Company has more than the minimum
gas buffer stocks to serve its customers in an emergency,
as required by applicable law.
CHART 17
Sources of IBERDROLA’s gas in 2006
(%)
Nigeria: 43%
Libya: 1%
Qatar: 4%
Trinidad and Tobago: 6%
Egypt: 18%
Algeria: 28%
77
Quality
We are a Company that is firmly committed to quality of
service. Over the last five years, we have successfully
developed the 2001-2006 Strategic Plan, one of the primary
aims of which was to guarantee reliable supply to almost 10
million customers in Spain. We have largely exceeded such
goal, by bringing the Installed Capacity Equivalent Interrupt
Time (ICEIT) to less than two hours, which entails a 21%
improvement from the figure at the beginning of the
reference period. Along with the efforts made by our
professionals to maintain and renovate the distribution
infrastructure, this significant progress in the quality we offer
is the product of investments which, over the last few years,
have allowed for the entry into service of more than 182
substations, almost 15,300 transformer centers and more
than 16,400 kilometers of lines. Furthermore, we have
confirmed our position as the principal developer of new gas
infrastructure in Spain, with an interest in the capital of the
regasification plants in Bilbao and Sagunto and the Medgaz
gas pipeline. We have thus proved that the best Company is
the Company that stands closest to its customers.
THE REGULATED BUSINESS
Electricity distribution network
Gas network
Telecommunications network
Quality of service
Energy supply
In 2006, IBERDROLA’s regulated business (electricity and
gas distribution) posted consolidated results of
14.5 million euros after taxes. The decrease in results in
this business, which came to approximately 400 million
euros, is primarily due to the negative impact of the
application of Royal Decree-Law 3/2006. Total
distribution assets amounted to 6,997 million euros.
Electricity distribution network
IBERDROLA’s electricity distribution network runs across
14 autonomous communities and 32 provinces, covering a
surface area of 190,000 square kilometers and serving a
population of 16.5 million. This network is equipped with
more than 18,200 kilometers of high-voltage lines and
200,000 kilometers of medium- and low-voltage lines.
There are also 863 transformer substations and
78,468 transformer centers.
IBERDROLA has continued to invest in the
expansion and improvement of
distribution facilities: 3,281 new
transformer centers and 3,436 kilometers
of new lines
Throughout 2006, IBERDROLA continued to invest
(548 million euros) in the expansion and improvement of
facilities, which made it possible to increase capacity at
various transformer levels up to the installation of almost
4,000 additional megavolt-ampere (MVA) on the grid.
Also, the Company laid 3,436 kilometers of new lines and
installed 3,281 new transformer centers (see table 21).
TABLE 21
Distribution facilities placed into service in 2006
Facilities
High- and very-high-voltage lines (km)
Medium- and low-voltage lines (km)
Overhead medium-voltage
Underground medium-voltage
Overhead low-voltage
Underground low-voltage
Installed capacity at transformer substations (MVA)
Transformer centers (no.)
Installed capacity at transformer centers (MVA)
Installed reactive capacity (MVAr)
Total
111
3,325
284
1,472
553
1,016
1,631
3,281
2,311
266
79
Gas network
In 2006, IBERDROLA cemented its position as the leading
developer of new gas infrastructure in Spain. The Company
has stakes in the regasification plants of Bahía Bizkaia Gas
(BBG), in Bilbao, and of SAGGAS, in Sagunto (25% and 30%
of share capital, respectively). At the end of the year, it
resolved to increase its interest in the MEDGAZ pipeline to
a 20% stake. In addition, the Company’s gas distribution
network runs across the Autonomous Community of
Madrid, the Autonomous Community of Valencia and the
Region of Murcia.
Telecommunications network
IBERDROLA also has an extensive telecommunications
network, consisting of more than 11,000 kilometers of
fiber optic cables, both proprietary and under
management, 304 point-to-point radio beams with
different capacities, 330 radio transponders and a large
voice and data switch network.
IBERDROLA’s ICEIT was below two hours,
entailing an availability of 99.98%
Regasification plant in Sagunto (Valencia)
Energy distributed in Spain
At year-end 2006, IBERDROLA had 9.9 million users in
Spain (up 2.1%), to which it supplied 99,520 million
kWh, 3.3% more than in 2005 (see chart 19). In addition,
the Company’s energy supply during this fiscal year
earned it a share of almost 40% of the total in mainland
Spain.
CHART 19
Quality of service
Despite adverse weather conditions during the first
quarter of the year and other issues caused by networks
not belonging to the Company that affected several
countries in Europe, IBERDROLA’s ICEIT (Installed
Capacity Equivalent Interrupt Time) was less than 2 hours,
standing at 1.96 hours/year (see chart 18), in line with the
last two fiscal years and 10% better than in 2003. This
figure entails a 99.98% availability.
CHART 18
Energy distributed in Spain
(Million kWh)
99,520
+3.3%
96,295
2005
2006
ICEIT
(hours/year)
2.17
1.96
1.87
1.68
Broken down by sectors, especially noteworthy were the
industrial and services areas, with increases of 4.2% and
4.5%, respectively (see chart 22). By autonomous
community, especially worthy of mention are the Basque
Country, the Region of Murcia and the Autonomous
Community of Valencia, with 4.2%, 4.0% and 3.6%
increases, respectively (see table 23).
IBERDROLA supplied 99,520 million kWh to
almost 10 million users, up 3.3% over 2005
2003
80
2004
2005
2006
TABLE 22
Energy distributed in Spain, by sector*
(Million kWh)
Sector
Residential
Industry
Services
Other
Household use
Total
Agric., stock-raising, forestry, hunting, fishing
Steel and foundry
Cement, limestone and plaster and construction materials
Chemical and petrochemical
Metal transf. and machinery
Food, beverages and tobacco
Pulp, paper, cardboard, paperwork
Rubber industry, plastic and other non-specified materials
Other industries
Total
Catering
Trade and services
Administration and other services
Other services
Total
Non-specified
Total
Total
2006
26,325
26,325
3,184
8,121
4,901
2,398
3,649
4,180
2,006
2,999
9,897
41,337
4,382
14,657
8,518
3,365
30,923
936
936
99,520
2005
26,091
26,091
3,284
7,411
4,606
2,388
3,580
4,011
1,893
2,956
9,487
39,616
4,219
13,927
8,164
3,298
29,608
979
979
96,295
% Growth
0.90
0.90
-3.04
9.59
6.40
0.44
1.93
4.19
6.02
1.46
4.32
4.34
3.88
5.24
4.33
2.03
4.44
-4.42
-4.42
3.35
(*) Including Eléctrica Conquense
TABLE 23
Distributed energy, by autonomous community*
(Million kWh)
Autonomous Community
Valencia
Madrid
Basque Country
Castilla y León
Murcia
Castilla La Mancha
Navarra
Extremadura
Galicia
La Rioja
Catalonia
Cantabria
Asturias
Aragón
Other
Total
2006
27,236
19,574
19,322
10,712
7,466
6,063
4,727
2,138
1,961
1,707
295
148
128
1.6
0.9
99,520
2005
26,289
19,023
18,541
10,543
7,179
5,867
4,584
2,067
8,860
1,666
249
141
136
1.7
0.8
96,295
% Growth
3.60
2.90
4.21
1.61
4.00
3.35
3.12
3.44
-77.87
2.50
18.35
4.93
-5.71
-1.31
4.43
3.35
(*) Including Eléctrica Conquense
81
Nature
Environmental protection and our pledge to sustainable
development have been the solid foundations upon
which our strategy has been developed over the last five
years, which strategy is in tune with a 100-year-old
tradition of focusing on the cleanest technologies for
electric power generation. The 2001-2006 Strategic Plan
has positioned us as a world leader in the renewable
energy area, with wind farms and mini-hydroelectric
plants being brought into service in Spain and abroad
with a combined capacity of 4,434 MW. But we do not
want to stop here, and we are currently developing
projects that we believe will enable us to reach a
renewable capacity of 7,000 MW by the end of 2009.
Along these lines, we have been a pioneer in the Spanish
electricity industry in struggling for compliance with the
objectives established in the Kyoto Protocol. We have
thus demonstrated that the best Company is the one that
is most respectful of the environment.
THE RENEWABLE ENERGY BUSINESS
World leader in renewable energy
Renewable energy project portfolio
Other renewable energy
In 2006, the renewable energy business posted gross
operating profits (EBITDA) of 557 million euros (up
21.7%) and consolidated results of 308 million euros
before taxes and of 191 million euros after taxes and
the allocation for minority interests. The contribution of
this business area to the results of the IBERDROLA
Group was 11.5% and its gross operating assets totaled
4,457 million euros, up 8.1% over fiscal year 2005.
CHART 20
Renewable energy installed capacity
(MW)
+624 MW
4,434
3,810
3,662
3,258
The renewable energy business was one of
the Company’s growth drivers in 2006,
contributing 11.5% to the results of the
IBERDROLA Group
A world leader in renewable energy
In 2006, IBERDROLA cemented its position as a world
leader in renewable energy through the entry into
operation of new facilities and through numerous
international transactions.
440
332
236
316
2005
Mini-hydroelectric
2006
Wind-power-International
Wind-power-Spain
At year-end, IBERDROLA’s renewable energy generation
facilities came to 3,994 MW, distributed among
13 autonomous communities in Spain and in 7 other
countries: Greece, 210 MW; Brazil 49 MW; France, 48 MW;
Poland, 41 MW; Germany, 34 MW; Portugal, 32 MW, and
the U.S.A., 26 MW, which together provide 440 MW of
installed capacity (see map on next page).
The investments (864 million euros) in renewable
energy made by the Company in 2006 enabled
IBERDROLA to expand its installed capacity by 624 MW,
reaching a total of 4,434 MW (up 16.4%) by year-end.
4,102 MW of all installed capacity correspond to wind
farms and 332 MW to mini-hydroelectric plants (see
chart 20).
IBERDROLA added 607 MW of wind power during 2006,
of which 403 MW were installed in Spain (Andalucia,
102 MW; Castilla y León, 104 MW; Castilla-La Mancha,
142 MW; Galicia, 28 MW; Murcia, 6 MW and La Rioja,
21 MW), and 204 MW abroad (U.S.A, 26 MW; Poland,
41 MW; Brazil, 43 MW; France, 28 MW; Portugal, 14 MW;
Germany, 34 MW and Greece, 18 MW). Additionally, the
Company brought into service a 17 MW mini-hydroelectric
plant at Alarcón (Cuenca).
Kisielice wind farm (Poland)
83
World presence of Iberdrola’s Renewable Energy business
U.S.A.
United Kingdom France
48 MW
26 MW
Germany
34 MW
Cyprus
Portugal
32 MW
Mexico
Greece
Hungary
210 MW
Spain
3,994 MW
Brazil
49 MW
Subsidiaries
Poland
41 MW
Italy
Affiliated company
The Company’s renewable energy facilities reached an
production of 7,867 million kWh in 2006 (7,329 million
kWh wind-powered and 538 million kWh
mini-hydroelectric-powered), which represents an 11.5%
increase as compared to 2005. By technology, 93.2%
corresponds to wind farms and the remaining 6.8% to
mini-hydroelectric plants (see chart 21).
China
Estonia
Projects under development
Installed capacity
IBERDROLA is the world’s leading wind
operator, with a project portfolio totaling
more than 18,400 MW
By installed capacity, 92.4% corresponds to wind farms,
and the remaining 7.6% to mini-hydroelectric plants (see
chart 22).
CHART 21
CHART 22
Production by technology
Installed capacity by technology
(%)
(%)
Wind power: 93.2%
Wind power: 92.4%
Mini-hydro: 6.8%
Mini-hydro: 7.6%
84
A portfolio of more than 18,400 MW in renewable
energy projects
At year-end 2006, IBERDROLA had a project portfolio
totaling 18,431 MW, with projects in both Spain (5,799 MW)
and abroad (12,632 MW). Resource measurements have been
taken for more than 11,000 MW of the total amount and
more than 3,500 MW are already under construction or have
construction rights (see table 24).
In 2006, IBERDROLA signed a large number of
agreements directed toward the fulfillment of its
internationalization objectives. Especially noteworthy is
the execution with Gamesa of the largest contract for the
supply of wind turbines in the history of the wind power
sector, in the amount of more than 2,300 million euros,
to be implemented between fiscal years 2007 and 2009.
IBERDROLA signed a large number of
agreements directed toward the
fulfillment of its internationalization
objectives in this sector
TABLE 24
Project portfolio (including Construction)
Scope
Under
development
Domestic
Wind power
Mini-hydroelectric
Other
International
Wind power
Mini-hydroelectric
Solar
Total
Resources
validated
Connection
rights and under
construction
5,799
5,151
2,330
4,951
186
661
4,660
186
304
1,917
87
326
12,632
5,891
1,185
12,447
175
10
5,891
-
1,185
-
18,431
11,042
3,515
The United States has become a strategic target for the
Company because of its great potential and the system of
tax supports for this type of energy. Following the
acquisition of the companies Community Energy, MREC
Partners and Midwest Renewable Energy Projects,
IBERDROLA already has a project portfolio of more than
5,000 MW in this country. Moreover, the Company signed
an agreement with Gamesa in 2006 for the acquisition of
wind farms in the U.S. between 2007 and 2009, with a
combined capacity of 1,000 MW.
Other significant transactions completed during this
fiscal year were the purchase of two wind farms in the
United Kingdom (20.55 MW); the acquisition of the
French company Perfect Wind, with a 600 MW project
portfolio; and the execution of a framework agreement
with the Municipality of Bayannaoer (China) to search
for locations to install wind farms totaling up to
1,000 MW.
Other renewable energy
With regard to other types of renewable energy,
IBERDROLA acquired the rights to the biomass plants of
As Somozas (La Coruña) and Archidona (Málaga), which
facilities add to the plant that the Company plans to build
at Corduente (Guadalajara). In addition, the Company’s
portfolio includes 13 solar thermoelectric power projects
in Spain, totaling 605 MW of capacity. Also planned is the
construction of a bioethanol plant at Barcial del Barco
(Zamora) and the development of a wave energy project in
Cantabria.
Mini-hydroelectric plant at Alarcón (Cuenca)
85
Expansion
We have already become one of the world’s leading
private electricity companies, thanks to a strategy which,
while guaranteeing a response to energy needs in Spain
at all times, has gradually led us to internationalization.
The 2001-2006 Strategic Plan having been completed, our
Group conducts its business activities in almost 40
countries and on four continents. Particularly significant
is our presence in Latin America, most notably in Mexico,
where we have positioned ourselves as the largest
private electric power generation company, with close to
5,000 MW in operation or under construction, and in
Brazil, where we are the leading energy supplier in the
northeastern area, with almost eight million customers.
Furthermore, two business areas are now key to this
unstoppable expansion process: renewable energy and
engineering and construction, with a focus on winning
energy projects for external customers and outside of
Spain. Also important is the development of the real
estate subsidiary, which has already taken its first steps
beyond our borders. We have thus demonstrated that the
best Company is the one that goes farthest.
LATIN AMERICA AND NON-ENERGY BUSINESSES
Mexico-Guatemala
South America
Iberdrola ingeniería
Iberdrola inmobiliaria
Corporación IBV
Thus, gross operating profits (EBITDA) grew 13.5% to
273.4 million euros at year-end 2006.
LATIN AMERICA
Yet another year, the Latin America business has been one
of the IBERDROLA Group’s main platforms for growth,
with a presence primarily focused on Mexico, Guatemala
and Brazil, but with business activity in Bolivia and Chile
as well. The equity value (the interest attributable to the
Company) of the 56 companies managed by the Group
came to more than 1,800 million euros, their assets
totaled 4,824 million euros and revenue amounted to
The largest independent generator of electricity in
Mexico
Following the entry into service in 2006 of the Altamira V
combined cycle plant, with 1,121 MW, IBERDROLA now has
six combined cycle plants in operation in Mexico
(see table 25), with a total capacity of 3,815 MW, and which
have generated 20,327 million kWh, 25% more than in the
previous fiscal year. This figure accounts for more than 8%
of the total energy generated in Mexico.
The Latin America business, one of the
IBERDROLA Group’s main platforms for
growth, contributed 19.4% of net profits
The results obtained in this business area in 2006 are the
product of the investments made (more than 300 million
euros), which contributed 18.2% of the Group’s gross
operating profits (EBITDA) and 19.4% of net profits.
Mexico-Guatemala
The Mexico-Guatemala region contributed the most to the
Latin America business revenues (58.5%) in fiscal year
2006, owing to the entry into operation of the Altamira V
combined cycle plant (1,121 MW), an increase in
production (up 25%), high availability, and efficiency
improvements in the generation facilities in operation.
Altamira V combined cycle plant (Mexico)
TABLE 25
IBERDROLA’s generation projects in Mexico
Name
Enertek
Monterrey
Femsa Titán
Altamira III & IV
La Laguna
Altamira V
Tamazunchale
Type
Cogeneration
Combined cycle
Cogeneration
Combined cycle
Combined cycle
Combined cycle
Combined cycle
Capacity
MW
120
1,000
37
1,036
500
1,121
1,135
%
IBERDROLA’s
100
100
100
100
100
100
100
Users
Industrial
CFE/Industrial
Femsa/Titán
CFE
CFE
CFE
CFE
Location
Tamaulipas
Nuevo León
Nuevo León
Tamaulipas
Durango
Tamaulipas
San Luis Potosí
Status
Operational
Operational
Operational
Operational
Operational
Operational
Construction
87
Moreover, the Company is building another combined
cycle plant in Mexico (Tamazunchale, with 1,135 MW),
which will commence operation in 2007 and is the largest
plant put out to tender in this country so far.
The plants in operation or under construction (with a
capacity of 5,000 MW) have established IBERDROLA as the
largest independent generator of electricity in Mexico,
after the state-owned Comisión Federal de Electricidad
(CFE).
IBERDROLA has solidified its position as
the largest independent generator of
electricity in Mexico, with plants in
operation or under construction totaling
5,000 MW in capacity
the Neoenergía group of companies, in which it has a
39% stake.
IBERDROLA is the leading electricity
supplier in northeastern Brazil, with a 58%
share of the regional market and a 7%
share of the domestic market
In 2006, these supply companies, which have managed to
improve the quality of service by 52% since they were
privatized, supplied 24,248 million kWh (up 4.2%) to
7.7 million users (up 8.4% and an additional 2.8+ million
since the privatization of the companies), which has
earned them a 58% share of the regional market and a
7% share of the domestic market. These three companies
posted combined sales of 2,141 million euros, 18% over
the previous fiscal year.
The leading electricity supplier in Guatemala
IBERDROLA is the leading electricity supplier in
Guatemala and the second-largest transmission
company through the companies Eléctrica de
Guatemala, S.A. (EEGSA) and Trelec, S.A., in which the
Company has a 39% interest. In 2006, it sold
3,826 million kWh to approximately 809,155 users
(up 4.2%), which represents a 58% market share.
South America
In South America, especially worthy of mention is the
increase in revenues in Brazil (up 27.8%), mainly as a
consequence of growing demand, tariff adjustments and
the positive impact of favorable changes in the exchange
rate for reference currencies in this country during fiscal
year 2006.
Additionally, the gross margin in Brazil improved by
31.8% (reaching 592.4 million euros) owing to a greater
contribution from the supply businesses, growing
demand (up 4.2%), tariff adjustments and revisions
totaling an additional 41 million euros, and a greater
contribution from the generation business. Thus, gross
operating profits (EBITDA) in South America rose 38.5%
during this period, standing at 436 million euros.
The leading electricity supplier in northeastern
Brazil
IBERDROLA is the leading electricity supplier in
northeastern Brazil owing to its interest in the companies
Coelba (Companhia de Electricidade do Estado da Bahía),
Celpe (Companhia Energética de Pernambuco) and Cosern
(Companhia Energética do Río Grande do Norte) through
88
Termopernambuco combined cycle plant (Brazil)
At year-end 2006, IBERDROLA had an attributable
operational capacity of 479 MW, corresponding to the
Termopernambuco combined cycle plant, with 520 MW
(203 MW of which are attributable to the Company), the
hydroelectric plant at Itapebí, with 450 MW (175 MW of
which are attributable to IBERDROLA) and the
mini-hydroelectric power plants at Afluente, with 18 MW
(with 8 MW being attributable to the Company). In
addition, the Company has six cogeneration plants with a
combined operational capacity of 93 MW through Energy
Works Brasil, a wholly-owned subsidiary of IBERDROLA.
The production of these plants in 2006 came to
2,810 million kWh (Termopernambuco, 1,554 million
kWh; Itapebí, 696 million kWh; the mini-hydroelectric
plants at Afluente, 77 million kWh; and 483 million
kWh from the cogeneration plants), which represents a
7.3% increase as compared to 2005.
The new investment cycle, which had already
commenced in the generation business through
Neoenergía with the award of the hydroelectric plants
at Baguarí, Nova Aurora and Goiandira (188 MW),
continued in 2006 with the award of an additional
389 MW, in respect of which especially worthy of
mention are the hydroelectric plants Corumbá III
(94 MW), in the State of Goias, and Dardanelos
(261 MW), located in the State of Mato Grosso.
Bolivia
In 2006, the two supply companies belonging to the
IBERDROLA Group, Electropaz and Elfeo (in which
IBERDROLA has stakes of 57% and 59%, respectively),
provided 429,901 users (up 4.6%) with 1,354 million kWh
(up 7.8%), which accounts for 37% of the total energy
supplied in this country. At year-end, sales for both
companies came to 65 million euros.
Chile
IBERDROLA is present in the Chilean electricity
generation sector through its subsidiary Iberoamericana
de Energía (Ibener), in which it holds a 95% interest. In
2006, the two hydroelectric plants, Peuchén (75 MW) and
Mampil (49 MW), generated 506 million kWh (up 3.7%)
and posted sales of 21 million euros (up 17%).
In the water sector, the affiliate Empresa de Servicios
Sanitarios de los Lagos (Essal), in which IBERDROLA has a
51% stake, provided 31,238 cubic meters of drinking
water (up 4.15%) to more than 166,000 users. This
company’s sales amounted to 38 million euros (up 12%).
IBERDROLA’s presence in Latin America
Subsidiaries
Electric power generation
Mexico:
Enertek
Monterrey
Femsa-Titán
Altamira III, IV
La Laguna
Altamira V
Tamazunchale
Brazil:
Itapebí
Afluente
Termopernambuco
Energy Works Brasil
Chile:
Peuchén
Mampil
Mexico
Guatemala
Electric power supply
Brazil:
Bolivia:
Coelba
Cosern
Celpe
Bolivia
Electropaz
Elfeo
Guatemala: EEGSA
Brazil
Chile
Water supply
Chile:
Essal
89
ENGINEERING AND NON-ENERGY BUSINESS
Iberdrola Ingeniería
The engineering business was one of the drivers of
IBERDROLA’s international growth in 2006, with
434.6 million euros obtained in contracts outside of
Spain.
CHART 24
Portfolio of IBERINCO
(E millions)
2,589
x3.3
2,221
Iberdrola Ingeniería increased its net
sales and net profits by 35% and 22%,
respectively
This subsidiary of IBERDROLA, which has cemented its
position as the largest engineering company in Spain,
increased net sales by 35.3%, to 648.8 million euros (see
chart 23), and net profits by 22.2%, to 33.2 million
euros. The most significant event was the increase in
contracting with companies outside of the Group, in the
amount of 549.4 million euros, up 54% over the prior
fiscal year.
CHART 23
Net sales of IBERINCO
(E millions)e)
648.8
+35.3%
479.4
2005
2006
In addition, internationalization left its mark on the
business portfolio of Iberdrola Ingeniería, which was
valued at 2,589 million euros at year-end, which is a
tripling of its portfolio. Of this amount, 85.8% came from
contracts on the international front, for a total of more
than 2,200 million euros (see chart 24).
90
755
490
265
368
2005
2006
Domestic
International
Iberdrola Ingeniería has cemented its
position as Spain’s largest company in its
sector, with a project portfolio in excess of
2,500 million euros
Activities in the international field
Iberdrola Ingeniería’s enhanced focus on international
growth is reflected in the activities it carried out in 2006,
with projects under development in more than 25
countries. The Company already has subsidiaries in Mexico,
Brazil, Venezuela, the United States, the United Kingdom,
Germany, Latvia, Poland, Russia, Slovakia, Bulgaria, Greece,
Qatar, Kenya, Tunisia and India (see map).
Among the principal international contracts signed in 2006,
especially noteworthy is the award of contracts for the
construction of the largest combined cycle plant in the
Middle East, in the city of Mesaieed (Qatar), for more than
1,630 million dollars, and of a combined cycle plant in Syria
(760 MW), valued at 430 million euros. Furthermore, it
signed a contract for the construction of an open-cycle plant
in Fujairah (United Arab Emirates), for 144 million dollars.
Other significant contracts signed in 2006 include the
contracts awarded by Mexico’s Comisión Federal de
Electricidad (CFE) for strengthening of the electricity
infrastructure in the State of Tamaulipas, for 63.6 million
dollars, and in the states of Chihuahua and Sonora, for
78.6 million dollars.
In addition, the Mexican investment company Electricidad
del Istmo awarded Iberdrola Ingeniería the construction of a
hydroelectric plant in the state of Oaxaca, for 13.9 million
dollars.
In the area of nuclear generation, Iberdrola Ingeniería was
awarded significant projects in Slovakia, for an amount
nearing 11 million euros, and in Brazil (4 million euros for
the provision of technical assistance to the nuclear station
at Angra), in addition to other projects in Ukraine, Taiwan
and China.
Also noteworthy is a contract for strengthening of the
electricity infrastructure in the Venezuelan state of Falcón,
for almost 80 million dollars; a project for the reinforcement
of electricity facilities at San Gerónimo (Venezuela), for
21 million euros; the modernization of the control system at
the principal hydroelectric plants in Kenya, for an estimated
5.5 million euros; the modernization of the electricity supply
grid in the region of Constantine in Algeria, and the
construction of transmission lines in Bulgaria, for 16 million
euros.
During this fiscal year, the Company continued working on a
project for the modernization of the electricity supply grid in
six regions in Tunisia; on a combined cycle plant in Riga
(Latvia), with 420 MW, and on a Mexican combined cycle
plant at Tamazunchale (1,135 MW), bringing into commercial
operation the Altamira V combined cycle plant (1,121 MW),
also in Mexico.
Wind farm at Morón de Almazán (Soria)
Worldwide presence of Iberdrola Ingeniería
Poland
Finland
Russia
Slovakia
Latvia
Sweden
Germany
Kazakhstan
United Kingdom
France
Spain
Greece
Italy
U.S.A.
Algeria
Armenia
Ukraine
Bulgaria
United Arab Emirates
Albania
Tunisia
Mexico
India
Taiwan
Qatar
Kenya
Venezuela
Brazil
Principal place of business
Subsidiaries
Projects under development
91
Also worthy of note are the contracts secured in new
countries, like Italy, where technical assistance will be
provided for the service of radiological protection and
description of waste of the European research center
JRC-Ispra, for 6 million euros, and France, where it started to
work with EdF on engineering and supply projects for the
new nuclear station at Flamanville.
Among the projects developed in 2006, most notable was
the work at the nuclear stations at Cofrentes, Almaraz and
Trillo, the engineering work for mechanical and electrical
equipment for the ITER experimental reactor at Cadarache
(France); the inspection and repair works at the Angra plant
in Brazil, and the project for the decommissioning of the
Bohunice unit 1 (Slovakia).
Iberdrola Inmobiliaria
Iberdrola Inmobiliaria, which has established itself as one
of the leading real estate companies in Spain, posted net
profits of 110.29 million euros in 2006 (see chart 25),
which represents a 15.4% increase over 2005.
Iberdrola Inmobiliaria’s net profits
increased 15.4% in 2006, reaching
110.29 million euros
CHART 25
Activities in the domestic field
The most significant activities carried out by Iberdrola
Ingeniería in Spain include commissions to build wind
farms totaling approximately 68 MW; to perform the
required works for the construction of a photovoltaic
plant with a capacity of 11.65 MW in Soria, for more than
74 million euros; to develop the 2 MW solar photovoltaic
plants in Cuenca, for 12 million euros; and to carry out
phases III, IV and V of the solar photovoltaic project for
the headquarters of Telefónica in Madrid, for more than
6 million euros.
Net profits of Iberdrola Inmobiliaria
(e millions)
110.29
95.58
87.83
2004
2005
2006
At year-end, pre-tax profits came to 152.85 million euros
(up 2.7%), while operating income (EBIT) amounted to
132.6 million euros. For its part, IBERDROLA’s real estate
subsidiary posted sales of 365.42 million euros.
Iberdrola Inmobiliaria had assets valued at 2,751 million
euros (valuation performed by CBRE) and equity of
696 million euros at the end of the fiscal year. In addition,
average pre-tax returns on equity came to 23.9%.
Photovoltaic plant at Almendricos (Murcia)
In the generation area, it finished work at the
Escombreras combined cycle plant (800 MW) and started
work at the Castellón 4 plant (800 MW) as well as a
thermo-solar cycle plant in Puertollano for 153 million
euros. With regard to transmission and distribution,
IBERDROLA’s subsidiary placed into service 36 new
substations and more than 4,500 MVA of transformer
capacity, thus completing expansion or renovation
activities at more than 80 facilities.
92
The company’s investments in real estate totaled
342 million euros, while approved investments pending
implementation amounted to 410.75 million euros in
2006.
This subsidiary, which focuses on sustainable development
through the development of bioclimatic and ecological
housing units equipped with the most innovative
techniques and materials for environmental conservation,
ended the fiscal year with 16 residential developments
under construction (1,292 housing units) and
24 residential developments under management
(1,438 housing units).
Corporación IBV
Corporación IBV, a venture in which IBERDROLA and
BBVA each hold a 50% stake, posted net after-tax profits
of 518.4 million euros in 2006, in accordance with
international accounting standards.
In 2006, Corporación IBV posted more than
a twofold increase in net profits, reaching
518.4 million euros
Aqua Multiespacio Center (Valencia)
This amount represents more than a twofold increase
over the results obtained in 2005, without considering
in 2006 the effect of the sale of Gamesa’s 11% to the
Company in the amount of 445 million euros, which
generated gains of approximately 342 million euros.
During the past fiscal year, Iberdrola Inmobiliaria
delivered 12 residential developments, for a total of
506 housing units. Additionally, it ended the year with an
above-grade surface area of 2,148,313 square meters for
residential and retirement developments, without
including committed transactions.
In 2006, the Company had an asset portfolio of
417,189 square meters of buildable surface area under
development, which earned it lease-related income in the
net amount of 41.35 million euros.
93
A Company that
is responsible
IBERDROLA inseparably links its activities as a
leading energy company to economic and
environmental sustainability and the
advancement of the society of which it is a part.
This principle leads us to make a firm
commitment to the best corporate governance
practices, causing us to focus on the balanced
and consistent satisfaction of the demands of
the various groups with which the Company is
related, seeking to give them the greatest
possible value.
To achieve these goals, IBERDROLA establishes
channels for permanent dialogue with all groups
with which it is related in order to determine
their expectations, assess the level of satisfaction
with the Company’s actions and make any
needed improvements in the management of the
Company. This is because we firmly believe that
the best Company is also the one whose
responsible conduct leads it to become deeply
involved with the advancement and well-being
of the society it serves.
95
Commitment
to sustainable development
IBERDROLA is ever more committed to
Sustainable Development, putting in practice a
strategy that makes the provision of the
high-quality energy service essential for
socio-economic development and better societal
quality of life compatible with the legitimate
corporate goals of growth and profitability, while
minimizing the environmental impact of its
activities. These principles are reflected in
IBERDROLA’s Vision and Values, are an essential
part of our corporate culture and are integrated
into the Company’s day-to-day management in
all areas of its activities. Our decisive wager on
sustainability, which has merited many
significant awards, is a differentiating and
value-creating element for IBERDROLA, as well as
a powerful incentive to continue to improve our
responsible behavior.
VISION AND VALUES
Foundations for responsible corporate ethics
IBERDROLA’s activities and their impact on society
FOUNDATIONS FOR RESPONSIBLE CORPORATE ETHICS
IIBERDROLA works o be an energy Company that makes
its commitment to ethics and its respect for the
environment the foundation for sense of belonging and
for confidence on the part of all of the people and interest
groups to which it is related.
The IBERDROLA Group’s subsidiaries in Latin America also
have Codes of Conduct in place that apply to all
employees.
-
In Brazil, the IBERDROLA Group’s subsidiaries have
codes of ethics which were updated and aligned in
2006, implementing a consistent “Code of Ethics” in
keeping with IBERDROLA’s “Code of Professional
Conduct” at all such companies.
-
Subsidiaries in Bolivia implemented a Code of Conduct
in Bolivia in 2006.
-
In Mexico, the same Code of Conduct established for
companies in Spain applies.
-
In Guatemala, the subsidiary EEGSA has a Code of
Conduct that was agreed on with the Workers’ Union
in 2000. In 2006, EEGSA and TRELEC implemented a
“Code of Ethics” in line with IBERDROLA’s Code of
Conduct.
-
In Chile, the subsidiary IBENER has Internal Order,
Health and Safety Regulations that set forth the rules
of ethical conduct for its employees, and ESSAL
reflects the these guidelines in its Business Plan.
This is reflected in IBERDROLA’s Vision Statement:
“We want to be the Company of preference due to our
commitment to the creation of value, the quality of people’s
lives and care for the environment”.
This vision is founded on five values:
• Corporate ethics and responsibility
• Economic results
• Respect for the environment
• Trust
• A sense of belonging, which may be viewed on the
Company’s website:
http://www.iberdrola.es/wcorp/corporativa/iberdrola
Faithful to such objectives, IBERDROLA promotes
behavior within its corporate Group based on:
• The Code of Professional Conduct, approved in 2002.
• The Ten Guidelines for Responsible Behavior, made
public in 2005.
These basic rules, which are also available on the
Company’s website
(http://www.iberdrola.es/wcorp/corporativa/iberdrola),
apply to IBERDROLA’s entire workforce in any
geographical location in which they carry out their
activities, and the Company applies them at all
wholly-owned companies of the group.
This ethical foundation governing activities and conduct
are also reflected in the various external initiatives to
which IBERDROLA has subscribed to and to which it has
given support in Spain, the most important of which in
recent years were the following:
2000:
Inclusion in the Dow Jones Sustainability Index.
2001:
Inclusion in the European Stock Exchange DJSI
STOXX.
2002:
Adherence to the UN Global Compact.
97
2002:
Participation as a founding member in the
Sustainability Excellence Club.
2003:
Inclusion in the Corporate Reputation Forum.
2003:
EURELECTRIC environmental guidelines.
2004:
Founding member of the Spanish Global
Compact Association.
TABLE 26
Scheme of the relationship between IBERDROLA and the
interest groups with which it is related
Channels for dialogue and communication
Internal and
external analysis
Items that are to
interest groups
Progress on
economic,
environmental and
social aspects
IBERDROLA also promotes the adherence of its
subsidiaries to this type of initiative. Thus, Electropaz
(Bolivia) formalized its adherence to the Global Compact,
which will also be subscribed by other subsidiaries in
Latin America in the future.
IBERDROLA and the interest groups to which it is
related
IBERDROLA’s strategic approach places particular
importance on the Company’s relationship with the
collectives (interest groups) affected by its activities, in the
two aspects involved in this relationship: from a
reputational point of view, to manage such group’s
perception of the company, and from viewpoint of social
responsibility, responding to their needs and expectations.
The number of interest groups in a corporate group such
as IBERDROLA is high. For practical purposes, in order to
report on them in a summarized manner, they have been
analyzed from the perspective of their relevance to the
Company’s activities, and have been grouped under eight
headings:
-
Human resources
-
Shareholders and the financial community
-
Regulatory authorities
-
Customers
-
Suppliers
-
The Media
-
Society
-
Environment
During fiscal year 2006, the relationship with these
interest groups was put into practice using the scheme of
table 26, which identifies four steps:
98
1. IBERDROLA has developed a set of channels for
dialogue and communication with its interest groups,
through which it can:
• Communicate its objectives, the actions it has
taken and the achievements it has made in the
three basic dimensions of sustainable
development: economic, environmental and
social.
• Receive opinions and requests from interested
parties.
2. Supplementing the above-mentioned channels for
dialogue, during the fiscal year IBERDROLA has used
various elements of internal analysis and has
consulted external sources to identify the needs and
expectations of these interest groups.
3. As a result of such analyses, IBERDROLA has
identified the relevant or ‘material’ items for these
groups.
4. Execution of the stages described above allows the
Company to focus its activities on the needs detected,
to set targets and to achieve progress in developing
this relationship.
Tables 27, 28, 29 and 30 further develop the contents
and results of the four stages described above. More
detailed information in connection therewith is provided
in the Environmental Information and Social
Information sections.
VISION AND VALUES
TABLE 27
Channels for Communication and Dialogue
Interest Group
Human resources
Channels for communication and dialogue
• Studies of the work climate
• Annual meetings of the Chairman & CEO with employees
• Informational meetings throughout the organization
• Committees and subcommittees arising from application of the collective bargaining agreement
• Corporate intranet, employee suggestion box, employee club
• Establishment/evaluation of goals and Individual Development Plan
• Orientation and integration of newly-hired staff
• In-house training days
• In-house magazines, digital newspapers, notice boards, etc.
Shareholders
and investors
• Various newsletters for shareholders and investors
• Free telephone assistance
• Corporate website and specific e-mail address
• Shareholder and investor satisfaction survey
• Direct contacts (Road-shows, conference call, visits to facilities, etc.)
Regulatory
authorities
• Frequent meetings or contacts
• Delivery of documents or information
• Relations through industry organizations
Customers
• Commercial offices, stores and service and sales locations
• Sales representatives and mobile office
• Special telephone numbers for customers and businesses
• Virtual office, e-mail and electronic bulletins
• Communication and public relations activities: meetings, fairs, visits,..
• Relations with professional associations, consumer associations, …
• Satisfaction surveys and studies of the quality of processes
Suppliers
• Supplier section on the corporate website
• Internet portal and supplier service center
• Meetings with business forums
• Supplier satisfaction surveys
• Workshops and delivery of the IBERDROLA award to the Supplier of the year
Communications
media
• Press releases and audiovisual reports
• Press conferences
• Personalized attention, interviews and meetings
• Questionnaires
• Corporate website with pressroom
Society
• Participation in the organizations of civil society
• Communication with social organizations and players
• Relations with public institutions and agencies
• Regional Advisory Councils
• Participation in forums, workshops, courses, etc.
Environment
• Environment e-mail:[email protected], available on IBERDROLA’s external and in-house websites
• Surveys, meetings and other contacts with various social groups
• Evaluations and ratings by third parties, including analysts of socially responsible investing
99
The following is a description of the various in-house
analyses and external sources used during fiscal year 2006.
TABLE 28
TABLE 29
In-house analyses and external sources
Material items identified by IBERDROLA
• Materiality study conducted by KPMG Asesores as part of
• Dialogue and communication with interest groups.
• Independent verification of publicly-available information.
• Communication of management aspects relating to
•
•
•
•
•
•
•
100
The following are the material items identified by
IBERDROLA in 2006:
the preliminary work to verify the 2006 Sustainability
report.
Recommendations arising from the analyses of the
sustainability reports made by the Observatorio de RSC
[CSR Observatory].
Daily review of sources of information specializing in these
issues, identifying relevant aspects that are of social
interest and disseminating them within the Company.
Monitoring of the work of various multi-group forums to
determine the “materiality” of information. Particularly
worthy of mention are: the viewpoints of interested parties
and the recommendations stemming from the Report of
the Subcommittee created within the Lower House of
Congress to strengthen and promote corporate social
responsibility of companies, issued in July 2006; the multigroup meetings organized by the Spanish Global Compact
association and the multi-group process carried out by
Global Reporting Initiative to publish a new edition of the
“Guide for the preparation of sustainability reports”.
Participation by IBERDROLA in forums and workshops
relating to Social Responsibility, with experts from various
types of organizations, making it possible to identify the
viewpoints of various interest groups and put forward the
Company’s points of view.
Assessment of the environmental aspect by socially
responsible investment analysts (the evaluations of SAM,
the Dow Jones Sustainability index analyst, and EIRIS, the
FTSE4GOOD analyst, have been taken into account) and by
the NGO’s with which IBERDROLA maintains relationships in
the environmental sphere (the Spanish Ornithology Society
[Sociedad Española de Ornitología] (SEO/BirdLife), Fundación
Global Nature, Fundación Tormes, Fundación Naturgintza and
Fundación Hogar del Empleado).
Analysis of trends in the approach to and breakdown of
environmental information by other leading companies,
with a detailed review of the environmental information of
six multi-national companies recognized for their
environmental management and information.
Monitoring of changes in the environment and principal
challenges and opportunities for the activities conducted
by the Company.
corporate governance, human rights, labor matters,
suppliers, social action and environmental impact.
• In the labor area, approaches that are respectful of human
rights, freedom of association and the improvement of
health and safety at work.
• In the economic sphere, ethical integrity and transparency.
• In the environmental field, strategies relating to the future
of energy sources, eco-efficiency, emissions causing a
greenhouse effect, waste and biodiversity.
IBERDROLA’s main progress in 2006 was: With people,
with shareholders, with customers and suppliers, with
society and with the environment, table 30.
VISION AND VALUES
TABLE 30
Main progress in 2006
Strengthening our
commitments
To people
Progress
•
•
•
•
•
•
•
•
•
To shareholders
To customers
and suppliers
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
To society
•
•
•
•
•
•
•
•
•
•
To the environment
•
•
•
•
•
•
•
•
•
New hirings: 988 persons (up 14%), of whom 25.4% were women.
Quality of Employment: 99.61% of positions are full-time and 91.55% of contracts are permanent.
More training hours: 660,470 (up 9.3%). 88.8% of the workforce has received training.
Greater attendance at training courses: 54,238 attendees (up 13.7%).
Greater presence of women in the workforce: 17% of total headcount.
Younger staff: average age 42.6.
Initiatives to reconcile professional and personal/family life: applied at IBERDROLA Ingeniería,, IBERDROLA Energías
Renovables and IOMSA.
Recognition Obtained- Family-Responsible Company Certificate and delivery of various prevention-related
certificates.
New channels of communication with employees: video-messages and in-house webcast (meetings viewed live on
the Intranet).
Greater employee representation on health and safety committees: 11,281 persons (up 4.9%).
IBERDROLA posted a net profit of 1,660 million euros in 2006 (up 20.1%).
Rise in share price: up 43.4%
Increase in dividend:: up 20.1% (includes a 0.02 euro attendance premium)
Total Shareholder Return (TSR: up 47.3%
New savings plan and profitability initiatives: launching of the Dividend Reinvestment Plan (DRP): over 22,000
shareholders participated
Investments in distribution, 689 million euros in Spain and Latin America.
Quality of service: Spain, ICEIT (Installed Capacity Equivalent Interrupt Time) of less than two hours/year and a 52%
improvement in quality of service in Latin America since the privatization of the companies.
New facilities in Spain: 3,200 transformer center and 3,400 kilometers of new lines.
Better customer satisfaction index (up 1.6%).
Greater interest in the preservation of the environment: 36% of customers consider Green Energy to be very or
quite interesting.
Products offered: periodic review and maintenance of home equipment.
Higher volume of purchases: 7,653 million euros (up 14%).
Promotion of the Supplier of the Year Award: addition of new categories (up 3) and participation of Latin American
suppliers.
Progress in diagnosis and supplier registration system: on-line access from the IBERDROLA website and diagnosis of
the sustainability of the purchasing chain.
Increased purchases from local suppliers (up 5%), now accounting for 92% of purchases, not including fuel.
2006 Best In Class recognition to IBERDROLA for social behavior.
74 million euros allocated to social development activities in Span and Latin America.
56 million euros invested in R&D&Innovation (up 4%), participation in 16 large-scale European innovation projects
and promotion of efficiency, new investments, customer, environmental and environment-society programs
1,600 million euros in tax contributions in Spain (as of the end of November 2006).
Greater number of quality standard certifications: (up 23%).
Stronger support for persons with disabilities as a priority in social activities.
Extension of the “Involved” [“Implicados”] program to new Autonomous Communities.
Implementation of the Corporate Volunteerism Program.
Receipt of certificate of accessibility for the IBERDROLA website and increase in the number of visits to the
pressroom (up 55%).
Commitment to millennium objectives through the 2015 campaign: “A better world for Joana”.
975 million euro investment in the most environmentally-respectful technologies.
Emissions of CO2 per kWh produced (211 g/kWh) less than half of the average for Spanish electricity companies.
Lower fuel consumption per kWh produced (down 11%).
100% of generation facilities in Spain and 95% of the entire production of the Group covered by Environmental
Management Systems.
Reduction in emissions (thermal mix) of SO2 (12.8%), NOx (17.5%) and particulates (14.3%). Gross production in
Spain free of CO2 stands at 65%.
Greater dedication to environmental training (up 24%).
Information focusing on matters directly valued by environmental interest groups: Environmental information with
aggregate indicators, better information on waste management at nuclear plants, projection of main indicators on
the basis of expected production and greater dedication to specific projects and impact reduction initiatives.
2006 Best In Class from Storebrand Investment and from the Climate Leadership Index for environmental behavior.
101
Membership in organizations and associations
The companies that are part of the corporate group
covered by this report belong to more than 270
Associations and Organizations of all kinds related to their
corporate activities. Below is a list of the most relevant
organizations at the international and domestic levels.
• International
- Instituto Acende Brasil
- Federação das Indústrias do Estado de Bahia,
Pernambuco y Rio Grande do Norte
- Instituto Ethos – Empresas e Responsabilidade Social
- Instituto Akatu – Pelo Consumo Consciente
- Cámara Oficial Española de Comercio de Brasil
• Chile
- EURELECTRIC
- European Energy Forum
- Electric Power Research Institute
- World Energy Council
- Asociación Nacional de Empresas de Servicios
Sanitarios
- Cámara Oficial Española de Comercio de Chile
• Guatemala
• Spain
- Cámara de Industria de Guatemala
- Cámara de Comercio de Guatemala
- Cámara de Comercio Guatemalteco-Americana
- Cámara Oficial Española de Comercio de Guatemala
- CentraRSE (Responsabilidad Social Empresarial)
- Cámara Empresarial de Comercio y Servicios
- Confederación Española de Organizaciones
Empresariales
- Asociación Española de la Industria Eléctrica
- Círculo de Empresarios
- Club Español de la Energía
- Asociación Española del Pacto Mundial de las
Naciones Unidas
- Asociación para el Progreso de la Dirección
- Patronato Casa de América
• México
- Asociación Mexicana de Energía
- Asociación de Industriales del Sur de Tamaulipas, A.C.
- Confederación Patronal de la República Mexicana de
Nuevo León
- Cámara Nacional de la Industrial de la
Transformación
- Cámara Española de Comercio
• Bolivia
- Cámara Boliviana de Electricidad
- Confederación de Empresarios Privados de La Paz
- Cámara Española de Comercio
- Federación de Empresarios Privados de Oruro
- Amcham Bolivia
• Brazil
- Agência Nacional de Energia Elétrica
- Associação Brasileira das Distribuidoras de Energia
Elétrica
- Associação Brasileira dos Agente Comercializadores
Energia Elétrica
Public recognition
The activities carried out by the IBERDROLA Group in
2006 have gained widespread recognition from various
organizations and institutions. The following tables
provide a description of the awards received in 2006.
Recognition from Socially Responsible Investment and Corporate Reputation Analysts and Investors
Dow Jones Sustainability World
and Dow Jones Stoxx Index 06
IBERDROLA becomes the only
Spanish electricity company to be
included in the “Climate
Leadership Index” for its approach
to climate change
Storebrand Investments SRI
chooses IBERDROLA as the
second electricity company
worldwide for its social and
environmental behavior
IBERDROLA is included in the 5
“Best in class utilities” in Socially
Responsible Investment in the
ranking prepared by Innovest SRI
Rating & Société Générale
In the University of Hamburg CR-Risk Premium Survey, sponsored by the SRI
division of Deutsche Bank, IBERDROLA leads the utilities sector with a score of
30.5 points, compared to the average of 19.2 points for the other 4 utilities
reviewed
102
IBERDROLA, is considered, for the
second year running, as one of the
100 most sustainable companies
in the world according to the
Global 100 Most Sustainable
Corporations in the World
According to the VIGEO analysts,
we improved our management of
Corporate Social Responsibility
IBERDROLA one of the companies
with the best Corporate
Reputation in Spain
VISION AND VALUES
Recognition given to IBERDROLA or to its employees
Award
Given by
Energy Company of the Year.
Best European electricity company in investor relations.
Award to the Monitoring, Diagnostics and Simulation Center (CMDS)
for the use of new technologies.
“EPRI Technology Transfer Award”.
“Family-responsible company”.
Leading company in the development of occupational risk prevention.
Environmental award to the Toledo Renewable Eenrgy Operating Center.
Award to the best employee portal at companies with over 5,000 employees.
Special mention at the “4th Good Practices in Local Sustainable
Development Award” for the Castejón combined cycle facility.
Best corporate activities report in information transparency.
Best on-line Investor Relations service.
National Safety and Emergency Award.
Leader in the Energy, Gas and Water Industries.
Platts Global Energy Awards
Institutional Investor Research Group
Electric Power Research Institute
Electric Power Research Institute
Fundación + Familia
Asociación de Empresas de Montajes Industriales
Toledo Chamber of Commerce
Instituto de Empresa, Capital Humano e Inforpress
Navarra Government
Nuevo Lunes magazine
Expansión newspaper
Euroseg Grupo Editorial
Spanish Corporate Reputation Monitor
Given to the Chairman & CEO
Award
Given by
Best executive of the year.
Special award for commitment to the development of new technologies and
promotion of the information society.
Leader among developers of the industry.
Platts Global Energy Awards
Asociación de Empresas de Tecnologías de la
Información de Castilla y León
Spanish Corporate Reputation Monitor
Recognition given to companies of the IBERDROLA Group or to their employees
Award
CELPE (Brazil)
Ibase Betinho Seal by the publication Balanço Social 2005.
Child-friendly Company.
Model Company.
ABRADEE Award for Social Responsibility (third place).
COELBA (Brazil)
Finalist for Good Corporate Citizenship.
Finalist for 2006 Social Balance Sheet Award.
Finalist for SESI Quality of Work 2006. award.
Best Service Industry Company, N/NE.
2006 Annual Balance Sheet Award - Best Company in the Electricity Sector in Brazil.
2006 Marketing Highlight Award.
IBASE Social Balance Award.
Gold Trophy.
COSERN (Brazil)
Ibase Betinho Seal by the publication Balanço Social 2005.
Child-friendly company.
Honorary mention, SESI, Quality of Work 2006 award.
IBENER (Chile)
Annual award of the Chilean Safety Association.
EEGSA (Guatemala)
Best electric power distributor in Guatemala.
Given by
Instituto Brasileiro de Análises Sociais e Econômicas
Fundação Abrinq Pelos Direitos da Criança e do
Adolescente
Guia Exame de Boa Cidadania Corporativa
Associação Brasileira das Distribuidoras de Energia
Elétrica
Guia Exame de Boa Cidadania Corporativa
Various Brazilian associations
Serviço Social da Indústria
Revista Exame
Gazeta Mercantil
Associação Brasileira de Marketing e Negócios
Instituto Brasileiro de Análises Sociais e Econômicas
Prêmio Gestão Qualidade Bahia 2006
Instituto Brasileiro de Analises Sociais e
Econômicos
Fundação Abrinq Pelos Direitos da Criança e do
Adolescente
Federaçao das Industrias do Rio Grande do Norte
–FIERNChilean Safety Association
Comisión Nacional de Energía Eléctrica
103
IBERDROLA’S ACTIVITIES AND THEIR IMPACT ON
SOCIETY
contributing to their economic and social development.
Specifically:
Introduction
IBERDROLA’s commitment to sustainable development
informs the strategic approach of its business and is put
into practice through the necessary infrastructure,
managing the impacts caused thereby.
• Electric power production, transmission and
distribution facilities are built in widely separated
geographical locations, contributing to the generation
of economic activity and employment in urban and
rural areas.
From the standpoint of this Report, the impacts stemming
from electricity generation and distribution facilities are
deemed to be relevant, with those caused by other
activities being considered of lesser relative importance.
• Because of such location, the electricity business
generates rates, taxes and assessments, allowing the
generation of income in economically disadvantaged
areas.
In their environmental aspect, the facilities put into
service by the Group’s companies have the studies
required under the legislation of each country, so that the
project that is ultimately implemented complies with
established requirements. These conditions basically affect
the implementation and operating periods of the
facilities, and the dismantling process to a lesser extent
because there are no plans to close currently planned or
operating facility in fiscal year 2006 or during the
2007-2009 extension period of the Strategic Plan.
• In the case of the IBERDROLA Group, its economic
activity is supplemented by a number of actions,
described in the “Society” chapter, which have both
direct and indirect beneficial impacts on the
community.
In the social aspect, the legislation of the countries where
companies of the IBERDROLA Group operate does not
require environmental impact assessments to be carried
out. Nonetheless, as part of the environmental reports on
new generating facilities, IBERDROLA prepares an analysis
of the social impact on affected communities in Spain.
Direct and indirect impact
Until it reaches its end use, electric power goes through a
number of stages, each involving activities with a
potential impact on the environment.
In the environmental aspect, throughout the entire life
cycle, there are global impacts on biodiversity, climate
change, the ozone layer and acid rain: and at the local
level, on the consumption of natural resources, emissions,
waste, noise, effluents, electromagnetic fields or visual
impact. A detailed description of this these types of
impacts is available in the “Environment” section of
IBERDROLA’s website
(http://www.iberdrola.es/wcorp/corporativa/iberdrola) and
the effects of IBERDROLA’s activities are quantified in the
“Environmental information” section of this Report.
From the social standpoint, expansion of the electricity
grids, like other economic activities, revitalizes the
regional economy in the regions where such grids are
located, creating employment opportunities and
104
A particular feature of electricity is that the end use of the
electric power sold does not create any kind of waste. Its
consumption is linked to progress and welfare and is vital
for the development of society, so that all aspects related
to the supply thereof are linchpins in achieving
sustainable development.
In Spain, the Integrated Quality and Environmental
Management System put in place at IBERDROLA includes
procedures necessary to obtain relevant information on
the impacts that are produced. This system calls for
internal and external audits to verify the effectiveness
thereof and, on the basis of such reviews, actions for
improvement are taken, as has been the case at many
hydroelectric and thermal plants.
To supplement the treatment of environmental and social
problems, IBERDROLA also cooperates with local
authorities, with which it establishes agreements under
which various kinds of public service actions are carried
out. In 2006, actions were taken in the surroundings of
hydroelectric, thermal and nuclear plants, such as the
assignment of land to build sports complexes or water
deposits, the installation of purifying equipment,
electricity supply to buildings used for social purposes,
improvement of access roads, etc.
VISION AND VALUES
Impacts on local communities
The conditions under which companies such as
IBERDROLA implement their investment plans are
carefully scrutinized by social organizations concerned
with the defense of human rights. The Company has a
sound ethical base, explained in depth in the
“Human Resources” section, that ensures that the
investment projects carried out by the Group comply with
particular standards, and no specific procedures are
required for that purpose.
There is also a social sensitivity in connection with the
activities carried out by companies in Latin America,
specifically in connection with their impact on local
communities and indigenous populations.
Respect for such communities is a hallmark of
IBERDROLA’s corporate policy.
In Bolivia, most of the population is of indigenous origin.
However, the areas served by the IBERDROLA Group
affiliates are predominantly urban areas and there is thus
no conflict of interest with these communities.
Nevertheless, these companies are disseminating
information and training their personnel in the Aymara
language, the mother tongue of the indigenous
community, to facilitate communication with this group
whenever required.
In Mexico, the construction of the Tamazunchale
combined-cycle plant indirectly affects an indigenous
community, although the plant is not being built within
its territory. To mitigate the potential effects of this new
facility, a process has been set in motion to communicate
the activities to be carried out; in addition, the concerns
or complaints of this community are being channeled
through the authorities of the municipality or state in
which the plant is being built, with the adoption of both
mitigating and community-assistance measures, such as
the introduction of protective devices or the improvement
of basic infrastructure.
In Guatemala, to preserve orally-transmitted traditions,
publications are promoted which emphasize the cultural
heritage and natural resources of the country and, in
some cases, place them within the Mayan world view.
These publications are provided as aids to primary school
teachers and the libraries of rural schools.
In Chile, IBENER has hired employees from the
pehuenche community and established avenues to work
together with that community. It is the company’s policy
to keep such groups informed and to foster their
employment by subcontractors rendering services.
None of the three distribution companies in Brazil has any
facilities located in areas that could cause an impact to
this type of community, although they are sensitive to the
impacts that could be caused to indigenous populations
in areas close to the locations where they operate.
Thus, for example, COELBA promotes actions with
indigenous communities in the interior of the State of
Bahía to change the electric installation of their homes,
exchange their refrigerators or provide them with
compact fluorescent lamps.
Other programs put in place by the companies and from
which these communities benefit are the “Light for
Everyone” [Luz para todos], “ELOS” and “Universalization“
[Universalización], programs which are described in the
“Society” chapter.
To benefit these communities, an institutional support
agreement is to be signed with FUNAI “Fundação Nacional
do Índio,” the body in charge of carrying out the policy of
the Brazilian government towards indigenous populations
in compliance with the provisions of the 1998
constitution.
FUNAI is responsible for promoting the education of
natives and for setting the boundaries of and protecting
their lands, preventing aggression by loggers, landowners
or any other group that threatens the survival of these
populations, which in Brazil number over 400,000
persons from 250 different groups.
In October 2006, the Neoenergía group (in which
IBERDROLA has a 39% equity stake) won the concession
for the construction of the Dardanelos Hydroelectric
Plant, on the Aripuanã river, in the State of Mato Grosso,
which will have 261 MW of installed capacity and will
come on stream in 2010. In the case of this plant, the
company cooperates not only with FUNAI but also with
the Health Ministry to benefit the surrounding
communities through the Ministry program known as
“Saúde Indígena”.
105
Commitment to the
environment
The environmental deterioration of the plant and the
consequences thereof (climate change, loss of biodiversity,
extreme meteorological phenomena, etc.) impose upon the
companies in the energy sector an unavoidable
responsibility to ensure the supply of energy while at the
same time reducing harmful effects on the environment.
IBERDROLA’s commitment to the environment and its use
of the cleanest technologies have allowed us to become a
worldwide benchmark in wind power in just five years,
positioning us as one of the companies with the lowest CO2
emissions in the European electricity industry and as the
leading company in Spain because of its compliance with
the Kyoto Protocol.
Through its Environmental policy, IBERDROLA is committed
to encouraging innovation and eco-efficiency in this field;
gradually reducing the environmental impacts of its
activities, facilities, products, and services; and striving to
harmonize the conduct of its activities with the legitimate
right of future generations to enjoy an acceptable
environment.
ENVIRONMENTAL INFORMATION
Management strategy and model
Key indicators and activities
MANAGEMENT STRATEGY AND MODEL
The environment in the 2007-2009 Strategic Plan(*)
The environment in the 2007-2009 Strategic Plan(*)
The energy environment for the coming years is
characterized by major growth in demand for energy,
particularly for electricity. This increased demand will lead to
worldwide growth in greenhouse gas emissions, which
contribute to climate change, as recognized by the scientific
community. Consequently, the environment will be an
increasingly important factor, and will have greater
economic repercussions. It is foreseeable that the emissions
market already operating in Europe, or similar market
solutions, may be adopted throughout the world.
Europe is advancing toward the creation of the Single
European Market under this scenario, with an energy policy
based on three variables: safety of supply, environmental
sustainability, and competitiveness.
Renewable energy remains one of the primary growth
drivers at IBERDROLA, which became a pioneer in the
industry by adopting environmentally more efficient energy
as a fundamental strategic guideline, which has made the
company an international standard-bearer in the industry,
through the adoption of the most well-established
technologies, the development of emerging technologies,
and the integration of renewal technologies into the system,
as well as through the improvement of its efficiency.
Accordingly, renewable installed capacity in 2009 is
expected to be twice that of 2005, after investments
estimated at 3,250 million euros, which will represent at
least 7,000 MW of installed power (5,074 MW in domestic
wind power, 1,447 MW in international wind power,
425 MW in mini-hydroelectric plants, and 55 MW in new
renewable energy technologies).
The combined cycle plants that are currently under
construction will also come online, giving Spain a total of
5,600 MW of energy from combined cycle plants. The
combined cycle plants are expected to meet more than 30%
of the demand, to the detriment of coal production, which is
more polluting than the gas from combined cycle plants.
Spain is also seeing major growth in demand peaks, which
must be met, even if only for a few hours each year. In
order to meet these peaks, IBERDROLA believes that
hydroelectric energy is the most efficient and
environmentally-clean energy. Therefore, the Company is
planning to build new adjustable hydroelectric plants in
the Sil and Júcar basins, with an installed capacity of
1,014 MW, and a new 636 MW hydro pumping plant in La
Muela (Júcar) in order to produce the peaks necessary for
the period beyond 2009.
All of these activities are in addition to the current plants,
which will remain on the leading edge of technology and
the environment through investments (770 million euros)
for the installation of new sulfur removal plants and to
enable an increase in the capacity and flexibility of the
thermal power plants.
With regard to the regulated market in Spain, the
Company intends to invest 1,800 million euros in a plan
centered around three central points: environmental
sustainability, quality and safety of supply, and efficiency.
All of these efforts will result in a more efficient network
with fewer energy losses, with a resulting saving in
emissions from generation that does not occur.
Improvements are also planned for specific sections of the
networks in order to protect biodiversity in particularly
sensitive areas.
Strong growth in the demand for electrical power is also
projected for Latin America. The principal activities are
centered in Mexico and Brazil, where the expected annual
growth rate is 5.2%. In Mexico, where the Company is the
leading private generator of electrical power, the projection
is for more than 5,000 MW of power in 2009, with natural
gas combined cycle plants.
In Brazil, growth is expected in both generation and
distribution/transport. Generation will be based on
hydroelectric plants and on combined cycle gas plants,
reaching 470 MW (attributable) in 2009. With distribution
and transport, in which 331 million euros will be invested,
the goal is to reach more customers with better quality and
greater efficiency.
(*) See the Notes at the beginning of this 2006 Sustainability Report for information about the 2007-2009 Strategic Plan.
107
The environment and innovation
Through its Environmental Policy, IBERDROLA is
committed to “promote research into and development of
new technologies that help to overcome key
environmental challenges.”
This commitment is reflected in the following notable
environmental research projects:
• The reduction of emissions from coal-fired thermal
plants (INQUEMADOS)
• Biomass co combustion in a coal-fired thermal plant
(BIOVEL)
biodiversity, and the encouragement of information and
training in this culture.
Organization
The environmental function is distributed throughout the
organizational and hierarchical levels of the Company.
A set of environmental domains is distributed into four
different levels of activity, ranging from the Chairman to
each person with local authority over his or her area.
IBERDROLA’s environmental organization is available in
the Environmensection of the www.iberdrola.com website.
Environmental organization expanded
in 2006
• Plasma-based treatment of radioactive wastes
• Integration into the renewable energy network
(WINDGRID)
• The implementation of distributed generation
(FENIX, EUDEEP)
• Active demand management [gestión activa de la
demanda] (GAD)
• A thermosolar plant with direct steam generation
[generación directa de vapor] (GVD)
• Use of ocean-wave energy (OLASLUZ)
• The design and construction of “eco-cities” (ECOCITY)
• The design of low-environmental-impact electrical
power lines (MASVERDE)
• Sustainable development in depressed areas
(RAYA DUERO)
The section of this report dedicated to innovation
provides more detailed information about the activities
performed during the 2006 fiscal year.
Environmental management system
Policy
IBERDROLA’s Environmental Policy is available in the
Environment section of the website www.iberdrola.com.
IBERDROLA’s Ten Guidelines for Corporate Social
Responsibility, which are also available on the website,
include the encouragement of a culture of respect for the
natural environment, with a reduction in the
environmental impact of its activities, the protection of
108
The Corporate Environmental and Quality Division,
which is part of the Strategy and Development Division,
is responsible for maintaining relations with the
Company's principal environmental collectives,
monitoring its surroundings and the environmental
implications thereof (emerging issues, innovations, and
good practices at other internal and external
organizations, and analyzing the possible
implementation thereof within the group) and for
promulgating the environmental policies and guidelines
that characterize the environmental strategy of the
business units and other corporate organizations, as
well as for preparing the annual environmental report
and encouraging environmental awareness-raising and
communication. It is linked to the Company’s other
environmental organizations through corporate
environmental committees.
The business units involved in energy-related activities
have their own environmental organization, which is
normally a centralized organization that is part of the
organization's technical services, and ultimately part of
the business division’s management, which in turn is
associated with the environmental managers at the
facilities, the management of which is coordinated
through the business divisions’ environmental
committees. In the generation business, there are three
centralized environmental coordination organizations
(one for each production technology).
These organizations coordinate the systems and
procedures for proper environmental management of all
of the facilities. They propose the environmental goals for
the business division, which must be consistent with the
corporate environmental guidelines, and are responsible
for directing compliance with the requirements of the
Overall Environmental Management System [Sistema de
Gestión Ambiental Global] at the facilities. They are
responsible for monitoring the management of the
indicators, which are reported annually to the Corporate
Environmental Division, except for data for the provisional
calculation of emissions (which is reported quarterly) and
incident-related data, which is reported immediately.
This organizational plan includes the Company’s
energy-related activities in Spain. Energy Works has its
own environmental coordinator, which is responsible for
ensuring homogeneous environmental management at
the cogeneration facilities.
It should be pointed out that the environmental
distribution organization was expanded in 2006 within
the framework of the Overall Environmental Management
System. Chart 26 shows the existing structure up until the
implementation of this system and the structure that was
developed thereunder, which entailed the appointment of
29 new environmental supervisors, five regional
environmental committees, and an environmental
coordinating board, with the corresponding definition of
the duties of each of these positions.
The non-energy business area created a new department
specializing in eco efficiency and sustainability in the real
estate division, which will work toward the creation of a
standard for sustainable buildings that Iberdrola
Inmobiliaria intends to incorporate into its developments.
Its work is focused essentially on research into, and the
development of, innovative proposals for achieving
greater energy efficiency.
Risk management
• The Company’s Comprehensive Risk System, which is
certified in accordance with the UNE-EN-ISO
9001:2000 standard, includes environmental risks.
Section D of the Model Annual Corporate
Governance Report for Listed Companies contains a
detailed description of the Company's risk policy,
the control systems that have been established, the
risks detected, the committees and organizations
that control and manage risk (including
environmental risk), and a description of compliance
procedures.
CHART 26
New environmental organization within the regulated market in Spain
+ COMMITTEES
+ REGIONAL COMMITTEES (5)
DISTRIBUTION COMMITTEE
New
environmental
organization
ENVIRONMENTAL
COORDINATING BOARD
REGIONS GAS
QUALITY AND
CUSTOMERS
TECHNICAL SERVICES
NORTHERN ENVIRONMENTAL
COMMITTEE
•Chairman
•Environmental supervisors
WESTERN ENVIRONMENTAL
COMMITTEE
•Chairman
MADRID ENVIRONMENTAL
COMMITTEE
•Chairman
Safety Supervisor
Contract Administrator
L.S.* personnel
L.S.* personnel
CENTRAL ENVIRONMENTAL
COMMITTEE
•Chairman
Area managers
EASTERN ENVIRONMENTAL
COMMITTEE
•Chairman
L.S.*+ A.C.** managers
(*) L.S.: Safety Supervisor
(**) A.C.: Contract Administrator
109
• The environmental risks of the facilities are also
managed:
- Through the preventive orientation of the
environmental impact assessments (EIAs) of the
projects.
• The environmental impact evaluation has a
preventive focus that serves as a basis for analyzing
the environmental feasibility of any given project
and, if necessary, for avoiding or minimizing the
project’s impact on the natural environment.
• The Overall Environmental Management System.
- Through the development of environmental
management systems.
- Through a system for the prevention and reporting of
incidents and anomalies, which is used as a decisionmaking factor for investments in preventive measures.
TABLE 31
Scope of IBERDROLA’s environmental risk
management tools
Risk-management tool
IBERDROLA
Comprehensive Risk System
Environmental Impact
Assessments*
Environmental Management
System
Preventive analyses
Scope of applicability at
All of the Company’s activities
and business divisions,
including the companies over
which there is effective control
IBERDROLA (Spain and México)
See the coverage at the
end of this section
IBERDROLA (Spain and México)
Brazil (Termopernambuco)
(*) IBERDROLA Mexico and the combined cycle plants in Spain include social
impact evaluations
The Overall Environmental Management
System covers essentially all of the Company’s
energy-related activities in Spain
The assessment of environmental risks requires a prior
analysis of the probability of their occurrence and of the
environmental impact. The most significant
environmental impacts of the Company's operations on
the environment are described in the Environment section
of the www.iberdrola.com, website, which also contains a
detailed description of the normal activities for their
control and mitigation. In the control and minimization of
these impacts, a significant role is played by the use of
more efficient environmental technologies and the
replacement of less efficient ones, which constitute the
central pillar of IBERDROLA’s strategy.
110
The environment plays a major role in general
terms and conditions for purchases, and also
in training
IBERDROLA’s Overall Environmental Management System
-which was implemented in compliance with the
UNE-EN ISO 14001:2004 standard, and which was
certified in 2006 by the Spanish Standardization and
Certification Association [Asociación Española de
Normalización y Certificación] (AENOR) after more than
two years of work in all of the Company’s business and
corporate areas in Spain- allows environmental risks to be
reduced, thereby improving resource management and
optimizing investments and costs.
The Overall Environmental Management System rounds
out the existing group of partial certifications, extending
management to all of the distribution facilities, to the
mini-hydroelectric generation plants (in the Renewable
area), and to the Company’s more than 200 buildings and
other structures, thereby covering 100% of the activities
involving the generation, distribution, and supply of
electrical power; the transport, distribution, and supply of
gas; and the supply of other products and services
associated with the supply and consumption of energy in
Spain.
Also noteworthy is the approval of the 2006
Environmental Guidelines, whose mission is to align the
environmental management of the business areas with
the Company’s overall strategy. These guidelines have
been disseminated throughout IBERDROLA in the form
of environmental objectives and milestones, including
the assignment of responsibilities, resources and
deadlines. Table 32 contains a non-exhaustive extract of
the guidelines.
TABLE 32
Environmental guideline
To improve the compatibility
IBERDROLA’s
infrastructures with their
surroundings
To improve the behavior
of the global indicators for
emissions and spills
To improve waste
management
To increase energy
efficiency and
conservation
Goals of the areas / business divisions
• To reduce the risk of bird mortality
• To minimize the environmental risks at
hydro production facilities (PRIMA)
• To minimize atmospheric emissions
(coal-fired thermal plants) and accidental
spills (thermal and combined cycle plants)
• To reduce the effective dose of liquid
and gaseous effluents at the Cofrentes plant
• To control and reduce gas emissions due to losses
in the gas transport and gas distribution networks
• To improve the environmental behavior
of the transformer stations
• To minimize the risk of spills at substations
• To improve the management of
employee transportation methods
• To minimize the toxicity of wastes in
case of a spill or fire at a transformer station
• To encourage recycling of the surplus
paper used in sales campaigns
• To reduce the risk of accidents in the handling of oil
• To reduce waste production at the Cofrentes plant
• To reduce the number of incidents caused by oil leaks
at wind turbines
• To increase the energy efficiency of the Distribution Grid
• To encourage energy efficiency among end users,
through energy audits and other user services
• To improve the environmental behavior
of the transformer stations
1.
2.
3.
4.
5.
6.
7.
8.
Guideline indicators(*)
Kilometers of high and medium
voltage of overhead lines removed
total km of these types of lines
Wildlife mortality / km of lines
CO2 specific emissions: thermal
mix (t/GWh)
Particle-specific emissions
thermal mix (t/GWh)
NOx specific emissions thermal
mix (t/GWh)
Number of activities to improve
the control of emissions
Number of activities tending to
reduce the risk of spills
Number of accidental spills
affecting third parties
9. Total hazardous wastes
produced, in tons per MW
of installed capacity
10. Percentage of losses in the grid
11. Percentage of sales of more
efficient products and
services
12. Percentage improvement in
performance of equipment
13. Volume consumed at offices
• To reduce water consumption at offices
To reduce water
consumption
(m3 per employee)
• To broaden the channels of communication with customers 14. Number of activities undertaken
To enhance dialogue with
interest groups, in keeping • To improve the dialog with environmental interest groups
to enhance dialog with
with the Company’s mission
environmenta interest groups
(*) The Areas / Business divisions set milestones and specific indicators for each of the established goals; however, this table shows the Guideline indicators that make it
possible to monitor the overall environmental performance of the Company.
111
A pilot experiment has been launched for the
implementation of an EMAS (Eco-Management
Audit Scheme) at two production facilities
The environmental requirements have also been
expanded, not only in the general terms and conditions
but also in the IBERDROLA Group’s basic terms and
conditions for the contracting of equipment, materials,
work, and services. The relevance assigned to the
environmental aspects of the purchasing function is
also evident in the creation of the new "Environmental
Management System" category in the IBERDROLA Prize
for the Supplier of the Year. (More information on this
topic appears in the Quality section of the Suppliers
part of this report).
Noteworthy in the generation area is the membership
of two plants -the Velilla del Río Carrión thermal power
plant in Palencia and the Castejón combined cycle plant
in Navarra- in the European EMAS (Eco-Management
and Audit Scheme) governed by European Council
Regulation No. 761/2001.
Environmental management at the Latin American
facilities is notable for the renewal of the
environmental management system certificate for the
Monterrey plant, in compliance with the
ISO 14001:2004 standard; the new certifications for the
Altamira III and IV plants; and the Enertek
cogeneration plant, all in Mexico, as well as the
Termopernambuco and Itapebi plants in Brazil.
The environmental management system of the
Peuchén-Mampil hydroelectric complex in Chile was
also certified.
Within the framework of the respective environmental
management systems, goals have been established that
focus primarily on reducing hazardous wastes. These
goals include a 10% reduction in the generation of
oil-impregnated materials at all of the facilities in
Mexico and, for the part-owned Ibener company in
Chile, the construction of spill-collector trays for the
oil-hydraulic power units.
In short, current production of energy under certified
environmental management systems (EMSs) is as shown
in table 33 below.
TABLE 33
IBERDROLA Spain*
Generating facilities
Cogeneration
IBERDROLA Latin America
IBERDROLA Group
(2006)
Energy production
under certified EMSs (%)
94.57
100
91.22
95.56
(*) As explained above, the Overall Environmental Management System covers
100% of the activities involving the generation, distribution, and supply of
energy by the companies that are 100% owned by IBERDROLA in Spain. It does
not include the companies that are subsidiaries of IBERDROLA Cogeneración, in
which the Company holds a 99% interest.
In the area of environmental training, four
environmental ratings -“basic”, “solid”, “advanced”, and
“expert”- were created in 2006, with 16,381 hours of
training over the course of the year (24% more than in
the previous year) and 4,123 employees attending.
112
INDICATORS AND ACTIVITIES
Analysts ratings(1)
IBERDROLA has maintained its environmental rating in
a manner consistent with previous years, with a rating
(72 points) that is substantially higher than the sector
average (58 points), according to SAM [Sustainable Asset
Management], the analyst for the Dow Jones
Sustainability Index (DJSI). The analysis of the
environmental dimension for this index includes the
following items: Environmental policy and management,
environmental results (eco efficiency), environmental
information, advanced environmental management
system, advanced environmental results, climate strategy,
infrastructure projects, electricity generation, transport
and distribution, and biodiversity (see chart 27).
CHART 28
Climate strategy assessment (2006)
(point score)
92
+76%
52
Sector average
IBERDROLA
CHART 27
Environmental dimension (2006)
(point score)
72
+24%
58
Sector average
The Company is in the midrange of companies in its
sector in terms of biodiversity management, according
to the rating by the Dow Jones Sustainability Index
analyst, with a score of 69 out of 100, earning the same
score in this category as in 2005, the year in which this
category was first included in the ratings by this index.
The area is a relatively new one, in terms of its reference
to strategic corporate management, and IBERDROLA is
working to implement a series of initiatives that will
place it among the leading companies in its industry
(see chart 29).
IBERDROLA
The Company is one of the leaders among companies in
its sector in terms of climate strategy, according to the
assessment of the Dow Jones Sustainability Index analyst,
with a score of 92 out of 100. In addition, for the second
year in a row, it has been selected as “Best in Class” in the
sector worldwide for its Climate Change strategy, earning
a place on the Climate Leadership Index. The strategy,
which is based on a significant development of renewable
energy and gas combined cycle plants, has led to a
balanced production structure that allows the Company to
remain among the major European businesses with the
lowest CO2 emissions per GWh of output (see chart 28).
CHART 29
Biodiversity (2006)
(point score)
69
+11%
62
Sector average
IBERDROLA
1. The information provided in this section reflects the ratings made by analysts in 2006. The environmental information used in those ratings reflects the 2005 fiscal
year. The 2005 ratings were made on the basis of information for the 2004 fiscal year, and the 2004 assessments were based on information for 2003.
113
Environmental information
The Company is in the leading group among businesses in
its industry in terms of environmental information,
according to the assessment by the Dow Jones Sustainability
Index analyst, with a score of 90 out of 100. It is also in the
leading group in the corresponding section of the Pacific
Sustainability Index (PSI). In 2006 there were major contacts
with environmental interest groups in order to determine
their expectations, which were taken into consideration in
the preparation of this report. Accordingly, the new
GRI (Global Reporting Initiative) guide was followed, and the
data underwent a more rigorous verification process
(see charts 30 and 31).
CHART 30
Environmental information according to the DJSI (2006)
(point score)
90
+14%
79
Sector average
IBERDROLA
CHART 31
Environmental information according to the PSI (2006)
(point score)
Indicators pertaining to production facilities:
• The results for IBERDROLA’s 100%-owned facilities in
Spain are reflected. They represent the results of
Iberdrola Generación and Iberdrola Energía Renovables,
and of the subsidiaries of Iberdrola Cogeneración, with a
99% equity interest.
• Separately, the same results for IBERDROLA’s
100%-owned facilities in Latin America are reflected,
which in this case consist of the results for the
Company’s generation and cogeneration plants in
Mexico and its cogeneration plants in Brazil.
• Last, the overall results for the IBERDROLA Group are
presented, which include the results for IBERDROLA’s
100%-owned facilities in Spain and Latin America, along
with those for the facilities in which the Company holds a
percentage equity interest. The latter facilities are the
partially-owned generating facilities consisting of the
combined cycle plants of Bahía de Bizkaia Electricidad,
Tarragona Power, and Termopernambuco; the Itapebi and
IBENER hydroelectric plants (Peuchen and Mampil); the
partially-owned nuclear power plants, the Iberdrola
Cogeneration plants in which the Company's interest is
less than 99%; and partially-owned renewable facilities.
The results for these facilities reflect the amounts
corresponding to the participatory percentage.
• In each case, the results for the generation plants are
separate from those of the cogeneration plants, because
of the major differences between these two types of
production and management capacity, which in the
latter case depends on the industrial facility.
75
+102%
37
Sector average
IBERDROLA
The activities and results presented below reflect information
about all of the sections of the environmental dimension that
were assessed specifically during the selection process for
members of the Dow Jones Sustainability Index and in which
the Company seeks to improve certain results through the
process that will be implemented throughout 2007.
114
Specific indicators
The information presented below reflects the Company’s
results according to the following criteria:
Other indicators:
• The results for IBERDROLA’s 100%-owned companies
in Spain are reflected.
• The results for IBERDROLA’s 100%-owned companies
in Latin America are shown separately.
• Last, the results for the IBERDROLA Group are presented,
which include the results for IBERDROLA’s 100%-owned
companies in Spain and Latin America, along with those
for the companies (Coelba, Cosern, Celpe, Electropaz,
Elfeo, EEGSA, Trelec, and ESSAL, in addition to the
previously mentioned ones) in which the Company holds
an equity interest, and which reflect the figures
corresponding to the percentage ownership.
This form of presentation entails a data-aggregation
method that differs from the one used in previous fiscal
years. Moreover, water processing is presented in
accordance with an internal methodology based on the
GRI Water Protocol.
Eco efficiency
The installed renewable energy capacity for the fiscal
year grew by a factor of 8.7 in comparison with the
year 2000, reaching more than 4,430 MW. According to
the strategic plan, this figure is expected to reach at
least 7,000 MW in the year 2009 (see chart 32). The
Company is the leading business in Spain in terms of
installed capacity in Renewable Energy. Renewable
energy production in 2006 allowed for savings of the
equivalent of more than two million tons of petroleum
during the fiscal year.
CHART 32
IBERDROLA is increasing its production while
reducing fuel, energy, and water consumption
and emissions and wastes per GWh of thermal
output
The program for the development of new combined
cycle plants resulted in an installed capacity of
8,818 MW (attributable). The goal of the new strategic
plan is to reach 11,126 MW (see chart 34).
CHART 34
Renewable energy. The IBERDROLA Group
Natural gas combined cycle plants. The IBERDROLA Group
7,000
11,126
8,818
4,434
507
0
2000
2006
2009 est.
2000
2006
2009 est.
IBERDROLA has an attributable installed cogeneration
capacity and attributable production of 497 MW and
3,067 GWh, respectively. The strategic plan calls for an
increase in its current capacity to 763 MW (installed) in
2009 (see chart 33). The Company is the largest
cogenerator in Spain,(2) with an installed capacity of
407 MW (attributable).
CHART 33
Cogeneration. The IBERDROLA Group
763
497
132
2000
2006
2009 est.
2. Cogeneration is a system for the combined production of electricity and useful thermal energy, starting from a single fuel. IBERDROLA’s cogeneration plants are
facilities that are associated with industrial processes, to which they provide thermal energy as well as the generation of electricity. These are high-efficiency facilities,
and therefore entail lower fuel consumption and fewer atmospheric emissions. Because they are located closer to the most widely distributed points of generation
consumption, they cause fewer losses in the electrical power grid. According to information provided by the Spanish Cogeneration Association [Asociación Española de
Cogeneración] (ACOGEN) (http://www.autogeneradores.com), cogeneration in Spain -with 5,786 MW of installed capacity, 860 plants (distributed generation), and
18,700 GWh poured into the electrical power grid- avoids 900,000 tpe/year of primary energy. Because of all of these advantages, European governmental institutions
view cogeneration as an essential system, not only for improving the safety of the energy supply but also because of its strategy of combating climate change.
115
The development of renewable technologies and of
combined cycle plants has resulted in a diversified
production structure with a strong presence among the most
environmentally efficient facilities (see charts 35 and 36).
CHART 35
CHART 36
Installed capacity of the IBERDROLA Group
in the year 2000
Installed capacity of the IBERDROLA Group
in the year 2006
(%)
(%)
Hydroelectric: 50%
Wind and Mini-hydro: 14.6%
Wind and Mini-hydro: 3%
Combined cycle plants: 29.0%
Nuclear: 20%
Thermal (coal and fuel-oil): 27%
Cogeneration: 1.7%
Thermal (fuel-oil): 9.5%
Thermal (coal): 4.1%
Nuclear: 11.0%
These technologies are replacing (in terms of operating
hours) the less efficient ones. The trend will continue in
the future, as a result of the increase in its importance
over the coming years, in keeping with the current
strategic plan(3) (see chart 37).
With the goal of meeting the increased demand over the
coming years, the participation of fossil sources will remain
important. As production with natural gas is displaced to a
large extent by other technologies, atmospheric emission
levels per thermal GWh produced(5) will be noticeable
reduced (see chart 38).
CHART 37
Replacement of thermal technologies. IBERDROLA Spain
(GWh)
26,991
19,859
CHART 38
CO2 emission factor, thermal mix.
IBERDROLA Spain
85%
(t/GWh)
862
12,388
62%
100%
581
466
-33%
7,512
2000
2006
38%
-46%
4,005
15%
2009 est.
Thermal power plants
2001
2006
2009 est.
IBERDROLA’s atmospheric emissions continue to be
among of the lowest among domestic and international
power companies. In 2006, the Company’s CO2 emissions
per GWh in Spain(4) stayed at 211 t/GWh for the emissions
and production of the plants in which the Company holds
an interest, and at 239 t/GWh considering only plants
that are 100%-owned by IBERDROLA.
3. The 2009 figures reflect the production projections under the new strategic plan.
4. This figure reflects absolute emissions in Spain (generating facilities 100%-owned by IBERDROLA, and the attributable percentage of the facilities in which the Company
holds an equity interest) divided by all production from generating facilities in Spain (facilities 100%-owned by IBERDROLA, and the attributable percentage of the
facilities in which the Company holds an equity interest).
5. The CO2 emission factor of the thermal mix reflects the application of the emission factors, by technology, based on the production projections forecast in the new
strategic plan.
116
Chart 39 shows a decreasing trend in ash production
over the period from 2000 to 2006 as a result of the
reduction in coal production in favor of greater
production by combined cycle plants. This trend will
continue in the future thanks to the entry into
operation of the combined cycle plants called for by
the new strategic plan, as indicated by the projection
(based on expected production levels) for the
year 2009.
CHART 39
Waste. Ash production. IBERDROLA Spain
(t)
701,620
401,490
311,120
2000
2006
2009 est.
The course of fuel consumption by production, as shown in
chart 40, indicates a decreasing trend, as a result of the
greater participation of combined cycle plants, with a ratio
of 0.16 tpe/MWh as opposed to 0.26 tpe/MWh for
conventional thermal power technologies,(6), with this trend
continuing over the coming years.
Chart 41 reflects the reduction in the ratio of cooling-water
consumption for thermal generation in Spain between 2004
and 2006. According to this trend, the figure will continue to
decrease between 2006 and 2009, based on production
projections for the combined cycle plants (growing) and
thermal power plants (decreasing) in the new strategic plan,
because of the lower specific cooling consumption of the
combined cycle plants (see the “Water” indicator on
page 131).
CHART 41
CHART 40
Specific consumption of cooling water (thermal mix)
IBERDROLA Spain
Fuel consumption. The IBERDROLA Group
(tpe/MWh)
(m3/GWh)
0,325
1,619
0,248
0,220
1,487
2004
2005
2006
2004
2005
1,478
2006
6. To calculate this figure, the total amount of fuel consumed by the combined cycle plants, conventional thermal power plants, nuclear power plants, and cogeneration
plants was divided by the production of these plants.
117
Energy
Fuel consumption is an important indicator of efficiency,
inasmuch as the greater the fuel consumption, the less
primary energy is consumed in order to produce a given
unit of electrical power.
In addition to having generating facilities with a
significant presence of energy sources based on
renewables, IBERDROLA’s Strategic Plan provides a
significant role for technologies (i.e., combined cycle
plants) with greater energy efficiency, with figures greater
than 50%. The current situation is reflected in table 34.
TABLE 34
Energy efficiency in production
(%)
2006
IBERDROLA Spain
Conventional thermal power plants
Cogeneration
Cogeneration
THE IBERDROLA Group
Conventional thermal power plants
Cogeneration
55.17
33.91
60.51
Table 35 reflects the fuel consumption results in 2006,
expressed as tons of petroleum equivalent (tpe).
TABLE 35
Fuel consumption
(tpe)
2006
IBERDROLA Spain
Generating facilities(*)
Cogeneration
Cogeneration
THE IBERDROLA Group
Cogeneration
Total
6,261,131
433,518
3,414,778
529,665
14,861,273
1,153,598
16,014,871
(*) The fuel consumption figure for IBERDROLA’s generating facilities in Spain
represents consumption at the combined cycle plants, conventional thermal
power plants, and nuclear power plants.
53.12
59.06
53.10
33.91
60.36
The overall production efficiency of IBERDROLA’s
thermal power generation plants increased in 2006
(see chart 42)(7). This positive trend is most visible among
the plants in Spain, where it will continue over the
coming years, thanks to the projected increase in the
number of operating hours of the combined cycle plants,
which are more efficient than conventional thermal power
plants.
The course of fuel consumption by production displays a
decreasing trend, as indicated in chart 40 on page 117.
Energy consumption
The amount of energy utilized in the generation processes
is another indicator of the efficiency of the process. This
parameter is known as “Auxiliary Consumption” or
“Internal Use.” Internal use during the fiscal year is
reflected in table 36.
TABLE 36
CHART 42
Internal use (GJ) [gigajoules]
Change in mean thermal efficiency in thermal production.
The IBERDROLA Group
(%)
49.94%
48.53%
2005
2006
2006
IBERDROLA Spain
Cogeneration
Cogeneration
THE IBERDROLA Group
Cogeneration
Total
7,198,456
216,713
1,761,688
177,314
9,193,448
465,458
9,658,906
7. To calculate this value, the production of each power plant was multiplied by its efficiency figure, and the sum of these partial values was divided by the total
production of the power plants.
118
The different thermal power generation technologies
display different efficiency values in terms of internal use.
Combined cycle plants display the most favorable results
(lower than half of those of coal- or fuel-oil-fired thermal
power plants) when internal use is compared against
production (see chart 43). Therefore, the trend is toward a
reduction in the ratio between internal use and
production, mainly in Spain, because of the replacement
of the less efficient technologies.
Efficiency of the electrical power grid
Spain
The investment effort made over the last few years has
led to a reduction in loss levels, which currently account
for 7.17% of the energy circulating through
IBERDROLA’s electrical power distribution networks.
This achievement was accomplished during a fiscal year
in which the amount of distributed energy rose from
96,295 GWh in 2005 to 99,250 GWh in 2006.
CHART 43
CHART 44
Internal use/production (2006)
IBERDROLA Spain
(%)
Losses in the distribution network
(%)
6.7%
4.6%
7.27%
7.47%
7.17%
3.3%
2.4%
Conventional
Nuclear Cogeneration Combined
thermal plants power plants
cycle plants
Energy consumption in buildings
Buildings consume about 40% of all the world’s energy.
Therefore, measures for improving the energy efficiency of
buildings have great development potential. Along these
lines, an important part of the activities performed at
more than 200 of IBERDROLA’s buildings throughout
Spain has been oriented toward reducing the buildings'
impact on their surroundings. As can be seen in table 37,
energy consumption at the buildings managed by
IBERDROLA has decreased significantly over the last three
years.
The relocation of the Madrid and Valencia offices to new,
more environmentally-efficient corporate offices accounts
for the improvement in this indicator in Spain.
2004
2005
2006
The improvement in the loss level in comparison with the
previous fiscal year (see chart 44) enabled an energy
saving of 320 GWh in 2006.
The following activities were implemented within the
framework of the Loss Reduction Project [Proyecto de
Reducción de Pérdidas]:
• Reduction in the length of the lines between the
feeder point and the supply points, through the
construction of new substations and an increase in the
power of other existing ones.
• An increase in voltage levels to 20 kV for the existing
segments of the network operating at 11 kV, 13 kV,
and 15 kV, and a change from 125V to 230V.
• An improvement in the power factor, with an increase
in the number of capacitor banks to 38, for a
corresponding additional capacity of 266 MVAr.
TABLE 37
Energy consumption at buildings
(MWh)
IBERDROLA Spain
Total
2006
84,145
33,464
117,609
2005
85,478
34,626
120,104
2004
97,247
34,266
131,513
• Balancing of energy circulation, through the new
Spectrum remote-control system.
119
• A change in the internal regulations governing the
purchase of transformers, encouraging the acquisition
of low-loss transformers.
• Actions to reduce administrative or nontechnical
losses, including the replacement of meters, a plan to
accommodate boundary points adjoining the
transmission network, and inspections.
All of the Latin American companies in which IBERDROLA
holds an interest have taken concrete action to control the
loss levels in their networks, including the installation of
capacitor banks, network reconfigurations, line
replacements, load control at the transformer stations and
in the distribution networks, etc.
The loss level for Cosern, Coelba, and Celpe is within
the average range for distribution companies in Brazil
(for some of which the loss level exceeds 20%). The loss
figures for these three companies include a significant
proportion of so called “non-technical” losses,
representing 26%, 29%, and 47% percent, respectively,
of the total figures for each company as shown in table
38, due in large part to non standard connections.
Because investments aimed at reducing technical losses
have an unfavorable cost-benefit ratio, the actions have
been oriented essentially toward reducing the
“non-technical” losses.
Climate change and greenhouse gas (GHG)
emissions(8)
Consensus currently exists within the scientific
community about the idea that our model of energy
generation and consumption is having an irreversible
effect on the environment, drastically altering the patterns
of the climatic systems.
These effects have not only been quantified from a purely
environmental viewpoint, but also have been the subject
of increasing analysis from an economic and social
perspective, as indicated in the conclusions of the Stern
Report published in 2006. This report estimates that if
action is not taken now, the global costs and risks of
climate change will be equivalent to a loss of at least 5%
of the annual global Gross Domestic Product every year.
These costs could increase by as much as 20%. However, if
the appropriate measures are implemented for reducing
greenhouse gas emissions to reasonable levels, then these
impacts may be limited to 1%. Therefore, it is crucial to
take steps now to minimize the long-term problem, from
both an environmental and economic point of view.
Accordingly, the energy industry is being called upon to
play a fundamental role in the battle against climate
change, inasmuch as the technologies that use fossil fuels
still have a significant presence. Greenhouse gas emissions
may be reduced through a reduction in energy
consumption and by improving the efficiency of power
generation and transmission, as well as the efficiency of
the end use of the energy. The use of renewable energies
and the replacement of fuels by others with a lower
carbon content are two important approaches for action.
TABLE 38
Network losses. Latin American companies in which IBERDROLA holds an interest
Country
Brazil
Guatemala
Company in
which an
interest is held
Coelba
Cosern
Celpe
Trelec
EEGSA
Electropaz
Bolivia
Elfeo
Transmission /
distribution
2006
losses (%)
2005
losses (%)
Distribution
Distribution
Distribution
Transmission
Distribution
Transmission
Distribution
Transmission
Distribution
14.41
11.96
17.76
5.92
10.01
0.55
11.20
0.97
5.82
14.34
12.35
17.87
1.47
9.42
0.70
11.81
1.67
7.55
8. Greenhouse gases. The Kyoto Protocol refers to the following six greenhouse gases: Carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons,
and halofluorocarbons.
120
The Company’s climate strategy, recognized by
the Dow Jones Sustainability Index and by the
Climate Leadership Index
Climate change entails a major change in the
management of a company such as IBERDROLA, because
since the entry into effect of the European Emission
Allowance Trading Directive, the costs of the generation of
electricity must include a new item, namely, the value of
CO2 emission allowances.
The principal financial consequence of this fact is that at
the end of each year, and within a multi-year period
(2005-2007 and 2008-2012), the companies included
within the scope of applicability of this Directive are
required to submit a number of emission allowances
equal to the emissions actually produced.
Accordingly, for IBERDROLA’s facilities in Spain, including
the cogeneration plants and excluding the Company's
interest in the Bahía de Bizkaia and Tarragona Power
facilities, there was deficit of emission allowances in 2006
in the amount of 972,065 tons. In 2006 the emissions
were lower and below the allotted amount, such that
there was a surplus in the amount of 503,307 tons of
emission allowances.
In short, the Company's overall position during the first
two years of emission allowance trading has led to a
deficit of 468,758 tons, which has been covered through
ongoing purchases on the market that have allowed
IBERDROLA to cover its position and to comply with the
established requirements.
IBERDROLA’s strategy, which is based on a significant
development of renewable energy (including, in particular,
wind power, more environmentally-efficient thermal
power production technology, and natural gas combined
cycle plants), has placed the Company in a very favorable
position. It has led to a very balanced production
structure that allows IBERDROLA to remain among the
leading European companies with lower CO2 emissions
per GWh produced.
The increase in the Company's production of renewable
energy and in its natural gas combined cycle plants has
led to a reduction in emissions over the course of the
second year of emission allowance trading, to a level
comparable to the designated level when the allowances
were initially allocated. The reductions in emissions have
acquired effective economic value, and have had a decisive
effect on the daily development of the energy markets, as
well as on the Company's future strategies.
IBERDROLA’s strategy with regard to compliance with the
Kyoto Protocol has also provided a source of
opportunities, and the Company's corporate image has
been strengthened through its recognition by various
reputable institutions with regard to preservation of the
environment and sustainable development. In particular,
the Dow Jones Sustainability World Index has given a
highly positive rating to the Company's actions.
IBERDROLA has also become the only Spanish power
company to appear on the Climate Leadership Index, alter
having been declared one of the Best in Class in its
industry at the international level, because of its decisive
strategy for combating climate change. Its inclusion for
the second year in a row on this selective list (which is
limited to the world's best 50 companies) reflects our
Company's participation in the assessment process
established by the Carbon Disclosure Project (CDP).
This study, which was driven by 225 international
investors who manage assets estimated at 31.5 billion
US dollars, evaluated 10 key aspects of the initiatives
adopted by the companies in order to slow climate
change. The Company was evaluated not only on the basis
of its current strategy, one of the mainstays of which is
defense of the environment and support for sustainable
development, but also on the basis of an appropriate
assessment of the risks and opportunities for its
operations arising from climate change, as well as on the
basis of the quality and effectiveness of the plans that
have been implemented to reduce greenhouse gas
emissions.
IBERDROLA's activities and facilities produce five of the
six greenhouse gases recognized by the Kyoto Protocol.
Quantitatively, carbon dioxide (CO2) is the most abundant
gas, and is generated by the burning of fossil fuels at
thermal power generation systems. Because of their
relatively small contribution, no information is provided
about the quantities attributable to other GHGs.
The document entitled “Environmental effects of the
production and distribution of electrical power”
[“Efectos ambientales de la producción y distribución de
energía eléctrica”], which is available on the
www.iberdrola.com website, reflects the most significant
environmental effects of the production of electricity
(on climate change, among others), the actions being
taken to control and correct them, and the characteristics
of the various different production technologies.
121
The carbon dioxide emissions for 2006 are reflected in
table 39.
as a result of the replacement of the thermal-power
technologies by more efficient combined cycle plants.
This trend will continue over the coming years, in keeping
with the goals of the strategic plan.
TABLE 39
CO2 emissions
(t)
CHART 45
2006
IBERDROLA Spain
Cogeneration
Cogeneration
THE IBERDROLA Group
Cogeneration
Total
11,547,552
1,090,121
6,880,753
1,040,552
Changes in CO2 specific emissions thermal mix(12).
IBERDROLA Spain
(t/GWh)
862
787
712
684
592
19,381,815
2,582,969
21,964,784
513
2001
IBERDROLA's results for absolute emissions and for the
overall mix(9) do not show a clear trend from one fiscal
year to another, because the final result depends on the
amount of hydroelectric production, which in turn
depends on the rainfall during the hydrological year.
Consequently, the hydroelectric production figures for
2006, 2005, and 2004 were very different.
The value of the overall mix on which the monitoring was
based is the value of the emissions produced by the
combined cycle plants and by the conventional thermal
power plants in Spain, because of the international
commitments made by this country and because the
facilities are subject to the emission allowance trading
regulations. The result of the overall mix of carbon
dioxide emissions in Spain in 2006 was 239 t/GWh
considering only plants that are 100%-owned by
IBERDROLA, and 211 t/GWh considering also the plants in
which the Company holds an interest. As a reference, the
same mix for European power companies was on the
order of 350 g/kWh,(10) and the figure for Spanish power
companies was 487 t/GWh(11).
The thermal mix indicator is most representative in terms
of monitoring the course of emissions from one year to
the next, because it directly reflects whether
improvements have or have not been made in the
emission-producing generation technologies. As indicated
in chart 45, the trend in recent years has been decreasing,
581
2002
2003
2004
2005
463
466
2006 2007est. 2008est. 2009est.
The result of the CO2-specific emissions (thermal mix)
for the Latin American generating facilities in 2006 was
365 t/GWh.
Since 2001, carbon dioxide emissions per GWh
produced by the thermal power plants have
dropped by 33%
Indirect emissions associated with energy imports
During the year 2006, IBERDROLA’s imports into the
Spanish electrical power system came only from France,
with a total volume of 112 GWh. This energy was
purchased through organized markets and bilateral
contracts. Because of the current status of the energy
markets, it is impossible to know which technology
produced the purchased energy and, therefore, the
specific CO2 emissions.
However, assuming that the specific emission of the
imported energy reflects the average for the French
electricity industry, and taking as an approximation the
specific emission figures published for the year 2004
by the International Energy Agency (70 t/CO2/GWh),
IBERDROLA’s imports accounted for 7,854 tons of CO2
in 2006.
9. Obtained by dividing the emissions by total production.
10. Source: “Environmental Statistics of the European Electricity Industry. Trends in Environmental Performance 2003-2004. Eurelectric. www.eurelectric.org-.
11. Source: UNESA -www.unesa.es-.
12. CO2-specific emission factor in the thermal mix: obtained by dividing the values of the absolute CO2 emissions by the electricity of thermal origin generated by the
Company, i.e., the ratio of absolute emissions (in tons) divided by electricity produced (in GWh) by the combined cycle plants and by the conventional
(coal and fuel-oil) thermal plants.
122
Emissions associated with the transportation of
passengers and fuel
Greenhouse gas emissions not arising from the Company’s
normal activities in Spain, although indirectly caused by
them, have been quantified since 2004. This category
includes emissions associated with the movement of
vehicles and other means of transportation for both
employee travel and fuel transport.
The method for calculating these emissions is based on
the application of emission factors that are taken from
internationally recognized publications and that assign
a numeric value to emissions on the basis of various
input parameters (see table 40).
power production and distribution” [“Efectos ambientales
de la producción y distribución de energía eléctrica”],
available on the www.iberdrola.com, website, which also
presents the actions for controlling and correcting these
effects, along with the characteristics of the different
production technologies.
IBERDROLA’s combustion profile puts the Company in an
excellent position in this regard, because the large
contribution of renewable energies reduces overall
emissions levels, and modern emission control
technologies incorporated into the combined cycle plants
bring these values to low levels.
The results of SO2 emissions for the fiscal year are shown
below (see table 42).
TABLE 40
GHG emissions associated with employee travel.
IBERDROLA Spain
TABLE 42
SO2 emissions
CO2 (t)
km
CO2 (t)
CH4 (t)
km
CO2 (t)
km
2006
18,210
33,804,903
1,770
280
75,582,530
70
1,557,457
2005
17,690
27,064,341
1,520
240
64,705,217
40
869,787
2004
11,950
17,032,437
1,370
220
58,527,241
30
640,051
The emissions factor of IBERDROLA’s fuel supply chain
was determined and the emissions from this activity were
calculated based on an analysis of the various means of
transportation employed (see table 41).
Sulfur dioxide, oxides of nitrogen, and particulate
emissions
Atmospheric emissions of nitrogenated and sulfurated
compounds created by the burning of fossil fuels causes
environmental effects, which are described in the
document entitled “Environmental effects of electric
(t)
2006
IBERDROLA Spain
Cogeneration
Cogeneration
IBERDROLA Group
Cogeneration
Total
33,712
225
208
29
33,941
253
34,194
The result of the overall mix(13) of sulfur dioxide
emissions in Spain in 2006 was 0.69 t/GWh, taking into
consideration only the plants 100%-owned by
IBERDROLA, and 0.51 t/GWh, taking into consideration
the plants in which it holds an equity interest. As a
point of reference, the same mix for European electrical
power companies was on the order of 1.25 t/GWh.(14).
TABLE 41
CO2 emissions associated with the transport of fuel. IBERDROLA Spain
Train travel
Ship travel
Road travel
Total
Kilometers traveled
2006
48,621,095
89,898
4,713,671
CO2 emissions (t)
2006
6,807
4
1,730
8,541
Kilometers traveled
2005
61,953,768
113,080
5,516,609
CO2 emissions (t)
2005
8,674
5
2,025
10,704
13. Result of dividing emissions by overall production.
14. Source: Environmental Statistics of the European Electricity Industry. Trends in Environmental Performance 2003-2004. Eurelectric. www.eurelectric.org14.
Result of dividing emissions by the entire production.
123
As indicated in chart 46, the indicator for SO2 emissions in
the thermal mix showed a decreasing trend in recent years
due to the replacement of thermal technologies. This
trend will continue over the next few years, in keeping
The indicator for NOx emissions in the thermal mix
showed a decreasing trend in recent years, as indicated in
chart 47, due to the replacement of thermal technologies.
This trend will continue over the next few years, in
keeping with the goals of the strategic plan.
CHART 46
CHART 47
Changes in SO2 specific emissions (thermal mix)(15).
IBERDROLA Spain
Changes in NOx specific emissions (thermal mix)(15).
IBERDROLA Spain
(t/GWh)
(t/GWh)
5.99
2.67
2.42
4.78
2.41
3.59
1.8
3.23
1.41
2.3
1.09
1.7
1.29
0.59
0.49
2001
2002
2003
2004 2005
0.6
0.46
2002
2006 2007est. 2008est. 2009 est.
The results for NOx emissions for the fiscal year are shown
TABLE 43
NOx Emissions (t)
2003
2004
2005
2006 2007est. 2008est.2009 est.
Particulates originate primarily from the burning of solid
fuels (coal). Given the small contribution of this
technology to IBERDROLA’s total generation, and the
incorporation of control systems and the minimization of
emissions, these levels have been held to very low figures
in recent years.
(t)
2006
IBERDROLA Spain
Cogeneration
Cogeneration
IBERDROLA Group
Cogeneration
Total
28,041
3,972
The results for particulate emissions during the fiscal year
appear below (see table 44).
TABLE 44
Particulate emissions
(t)
847
229
29,235
6,173
35,408
The result of the overall mix (16) of nitrogen oxide emissions
in Spain in 2006 was 0.58 t/GWh, taking into consideration
only the plants 100%-owned by IBERDROLA, and
0.52 t/GWh, taking into consideration the plants in which it
holds an equity interest. As a point of reference, the same
mix for European electrical power companies was on the
order of 0.06 t/GWh (17).
2006
IBERDROLA Spain
Cogeneration
Cogeneration
IBERDROLA Group
Cogeneration
Total
2,313
168
49
2,498
49
2,547
(*) Does not include figures from Altamira V, which entered into commercial
operation in November 2006.
15. Specific emission factor in the thermal mix: result of dividing the absolute emission values by electric production of thermal origin generated by the Company, i.e., the ratio
of absolute emissions (in tons) divided by the electricity produced (in GWh) by the combined cycle plants and the conventional thermal power plants (coal and fuel).
17. Source: Environmental Statistics of the European Electricity Industry. Trends in Environmental Performance 2003-2004. Eurelectric. www.eurelectric.org
124
The result of the global mix(18) for particulate emissions in
Spain in 2006 was 0.05 t/GWh, taking into consideration
only the plants 100%-owned by IBERDROLA, and 0.03
t/GWh, taking into consideration the plants in which it
holds an equity interest. As a point of reference, the same
mix for European electrical power companies was on the
order of 0.12 t/GWh(19).
The indicator for particulate emissions in the thermal mix
showed a decreasing trend in recent years, as indicated in
chart 48, due to the replacement of thermal technologies.
This trend will continue over the next few years, in keeping
CHART 48
Change of the specific particulate emission factor in the
thermal mix(15). IBERDROLA Spain
(t/GWh)
0.26
In 2006, 78 equivalent kg of CFC-11 were inventoried
in the cooling systems of the Santurce thermal power
plant.
Similarly, during the fiscal year, 14 cylinders of halon
1301, each weighing 45 kg, were removed from the
Records Center of the Cofrentes nuclear power plant,
for a total of 630 kg. Thus, 2,679 kg of the gas are still
present in the cylinders currently in use.
The cooling systems of the various power plants and
cogeneration facilities in Mexico were found to contain
90.45 kg of CFC-11.
0.33
0.27
Ozone layer-reducing emissions
The chlorofluorocarbon (CFC) substances long used as
refrigerants and propellants are a threat to the ozone
layer if they are released into the atmosphere. At
IBERDROLA’s facilities, ozone layer reducing substances
are present primarily in fire suppression equipment
and cooling systems, and the equipment is maintained
in accordance with the provisions of applicable
regulations.
0.24
0.17
0.12
0.1
0.05
2001
2002
2003
2004 2005
0.05
2006 2007est. 2008est. 2009 est.
In 2006, the Velilla thermal power plant implemented a
combustion control system consisting of a system for
monitoring local boiler conditions and an expert
optimization system which, based on the data obtained, can
suggest action to be taken with regard to the combustion
regulation variables.
With this initiative, which will gradually be extended to
the rest of the facilities, NOx emissions are expected to be
reduced by 15% to 25%, with a minimal impact on the
levels of pollutants generated. Work has also begun at this
facility to build a desulfurization plant, which will reduce
the plant’s sulfur oxide emissions by more than 90% and
its particulate emissions by 70%.
The only atmospheric emissions originating from these
confined products would be those arising from possible
losses, which are practically negligible.
IBERDROLA’s office buildings were found to contain
2,744.2 kg of R-22 coolant in their air-conditioning
equipment. As specified by international conventions
on the management of chemical products damaging to
the ozone layer, their use in new air-conditioning
equipment will be restricted in most countries starting
in 2010. IBERDROLA’s specific policy regarding this
substance is based on reducing its presence at facilities,
as evidenced by the reduction noted during the last
year, when the quantity fell from 4,080 kg in 2005 to
2,744.2 kg in 2006.
Meanwhile, the Lada thermal power plant has completely
rebuilt two of its four electrostatic precipitators, replacing all
of the emitter electrodes and collector plates with others
that reflect the latest technology. The control system has
also been completely replaced. This change is expected to
produce improved reliability in fly ash collection and a
significant reduction in particulate emissions.
19. Source: UNESA, www.unesa.es-.
125
Biodiversity
Environmental diversity and a relatively low rate of
degradation make it easier for Spain to have large expanses
of protected areas and many legal avenues for the
environmental protection of this space (see table 45), with
very diverse designs, dimensions, assets to be protected, and
management methods.(20) Because the trend toward
increased protection of both land and species in general is a
characteristic of highly industrialized nations, it is likely
that the spaces that are now legally protected will continue
to expand in the future.
TABLE 45
Environmental biodiversity (2006)
Surface area
(hectares)
Total area of the country
National parks
Biosphere reserves
RAMSAR spaces
Natural parks
ZEPAs(*)
LICs(**)
50,478,200
328,912.00
2,420,968.00
173,124.55
3,319,474.00
9,237,745.00
11,909,636
% of the total
surface area
of the country
100.00
0.65
4.80
0.34
6.58
18.30
23.59
(*) Special Bird Protection Areas.
(**) European Community Interest Areas.
As a result of this trend, the Company created a working
group in 2006 with representatives from environmental
organizations and from the generation, distribution, and
renewable energy units. Documents have been prepared,
one of which gives IBERDROLA’s public position on
biodiversity, and the other consisting of an introduction to
biodiversity, the latter of which is available on the
Company’s internal and external website. This group is also
working on the Company’s Biodiversity Action Plan for 2007
and the subsequent fiscal years.
Location and areas occupied by facilities in protected
areas; impact and management focus
The presence of the Company’s facilities in different
protected areas and their principal impact are described
below. The most significant environmental effects of the
activities for the production and distribution of electricity,
activities for monitoring and correction, and the
characteristics of the different production technologies
are described in the documents entitled “Environmental
effects of the production and distribution of electrical
power” [“Efectos ambientales de la producción y
distribución de energía eléctrica”] and “Introduction to the
concept of biodiversity management at the company”
[“Introducción al concepto de gestión de la biodiversidad en
la empresa”], both of which are available in the
“Environment” section of the website. www.iberdrola.com.
Generation facilities
There are no thermal generation facilities in these areas, or
any significant effects thereof on adjacent areas, that do not
produce substantial local effects, either through
atmospheric emissions or through the use and discharge of
water at these facilities. Their environmental management is
oriented toward minimizing emissions and the risk of
accidental spills (see the goals of the Environmental
Management System on page 111 and the section entitled
Accidental Spills on page 133). The new combined cycle
natural gas plants are also subject to the environmental
impact assessment procedure, in which the impact on
biodiversity during the design, construction, operation, and
dismantling phases of the facility are analyzed and
predicted, with the participation of Iberdrola Ingeniería y
Construcción, within the context of a process certified as
compliant with the UNE-EN ISO 14001:2004 standard.
The company is working on a biodiversity
policy and action plan
However, a substantial part of the hydroelectric assets are
located in diverse types of protected spaces. Pursuant to
Spanish water legislation, these areas are public assets that
are managed by IBERDROLA under a concession
arrangement for a specific period of time, as established in
each case. Table 46 shows the location and occupied area of
the principal elements.
According to the figures shown in table 46, reservoirs
represent 1.44% of the protected area in which they are
located. The managed reservoirs also include 14,670
hectares located in areas of the Nature Network
[Red Natura] areas (i.e., Special Bird Protection Areas
(ZEPAs) and Common Interest Areas (LICs)).
The Company has no significant plans to develop these
assets over the next few years, and therefore no significant
environmental or social effects are foreseen in terms of
construction activities. The Company’s policy in this area is
focused particularly on improving the operating and
environmental efficiency of the existing assets.
The principal impact of the reservoirs on biodiversity consists
of the fragmentation of the habitat and the transformation of
the ecosystem due to the conversion from a lotic water
system to a lentic or semi-lacustrine water system.
20.Regarding the management categories of the World Conservation Union (WCU) www.uicn.org- most protected areas in Spain are category VI (“Managed Resource
Protected Areas”), i.e., protected areas managed primarily for sustainable use of the natural ecosystems.
126
Because the vast majority of these assets were built more
than 20 years ago, prior to the designation of the
protected areas, the gradual effect has been the creation
of new ecosystems, giving rise to the current situation in
which there are many examples of integration into the
natural environment. Some of these spaces contain
concentrations of diverse species of aquatic wintering birds
(Ullivarri, Esla, Azután, Valdecañas, and Alcántara, etc.),
while others are used in avian migratory routes
(the above-mentioned four, others in the Mediterranean
basin, etc.). Another example is the river canyons
(reservoirs located in the Arribes del Duero and Tajo
canyons), which contain concentrations of extensive
populations of birds of prey (the royal eagle, leonado
vulture, peregrine falcon, black kite, hawk, Egyptian
vulture, et al.).
The focus of biodiversity management in power
generation at these assets is oriented toward reconciling
their operation with preservation of the environment.
Thus, the economic forecasts in the Company’s new
strategic plan include a budget for implementing the
principal working approaches to biodiversity, which
consist of:
• Minimization of environmental risks at the facilities.
• Development of the water quality measurement
network, by segments.
• Recovery of natural environments.
• Protection from invasive species.
• Fauna protection activities.
• Agreements with environmental authorities.
One highlight of 2006 was the PRIMA Project, which
received an endowment of 1,151,000 euros. Within its
framework, various adjustment have been made within
the facilities (including water-oil separators, oil splash
TABLE 46
Reservoirs in protected areas
Type of space
Biosphere reserves
National parks
RAMSAR spaces
Natural parks
Name of the space/area
(hectares)
330,460
Monfragüe / 116,160
Sierras de Cazorla,
Segura and Las Villas /
214,300
Ullibarri reservoir
embankments / 397
136,965
Montes
Invernadeiro / 5,772
Arribes del Duero /
106,105
International Tajo /
25,088
Total biosphere reserves,
467,822
national and natural parks
and ramsar spaces(*)
Autonomous
community
Extremadura
Andalucía
Basque Country
Reservoir
Torrejón Tajo
Torrejón, Tietar,
Alcántara
La Vieja
Anchuricas
Ullibarri
Las Portas,
Cenza, Cenza Medio,
Castilla y León
Villalcampo,
Castro, Aldeadávila,
Saucelle
Extremadura
Cedillo
Galicia
Reservoir area
(hectares)
2,365
2,301
Reservoir area
in the
space (%)
0.72
1.98
64
0.03
0
397
0
100
3,986
1,383
2.91
23.96
1,203
1.13
1,400
5.58
6,748
1.44
(*) The natural spaces of Monfragué and Sierras de Cazorla, Segura, and Las Villas are not shown, because the larger area, which has been declared a biosphere reserve, is
already shown.
127
detectors, impounding basins and leak collection trays,
improved residual water discharge installations,
installation of oximeters, etc.). The budget allocation has
been increased, as has the quality of the barriers, controls,
and other physical means of containing and absorbing
accidental spills. Channels have been fenced to prevent
animals from falling into them, and sediment-removal
activities have been performed in the reservoirs, etc.
Distribution facilities
Regarding distribution, the facilities present in
protected areas consist of overhead medium, high, or
very high voltage electrical power lines. Because
essentially all of the protected spaces were declared
within the last 20 years, most of the facilities had
already been built before the protection of the various
spaces was declared.
Regarding the protection of the existing river ecosystem
downstream of the reservoirs, all of the dams involved
have a maintenance flow rate or ecological flow rate that
ensures the existence and preservation of the fish species
in these sections of the rivers.
Part of these power-line infrastructures are located in
diverse types of protected spaces. The location and
occupied area of the principal elements are shown
IBERDROLA’s very high voltage lines cover a length of
6,210 kilometers, 26% of which is located in protected
areas. The medium and high voltage lines cover a length
of 95,103 kilometers, 43.5% of which is located in
protected areas.
TABLE 47
Electrical power lines in protected areas (2006)
Type of space
Name of the space
Autonomous Community
Biosphere reserves
Bárdenas Reales
Cazorla, Segura and Las Villas
La Mancha Húmeda
Manzanares
Monfragüe
Peaks of Europe
Navarra
Andalucía
Castilla-La Mancha
Madrid
Extremadura
Cantabria, Asturias
and Castilla-León
Asturias
Basque Country
La Rioja
National parks
RAMSAR spaces
ZEPAS
LICs
Total
128
Redes
Urdaibai
Valle del Jubera, Leza,
Cidacos and Alhama
Peaks of Europe
mountain range
Orellana reservoir
Valencia lagoon
El Hondo lake
Villafáfila lakes
Mar Menor
Pego-Oliva marsh
Prat de Cabanes-Torreblanca
Mundaka-Guernica river
La Mata and Torrevieja salt marshes
Santa Pola salt marshes
Cantabria, Asturias
and Castilla-León
Extremadura
Valencia
Valencia
Castilla-León
Murcia
Valencia
Valencia
Basque Country
Valencia
Valencia
Presence of lines (km)
Medium and Very high
high voltage
voltage
2,369.80
199.80
29.05
0.00
405.20
23.30
8,098.20
13,856.00
24,758.25
1,018.30
1,466.00
2,704.00
In the distribution activity, the principal impact on
biodiversity occurs in the construction and also in the
operation and maintenance phases. During
construction, flora and fauna are disturbed by the
presence of humans and machinery, noise from the
work, and alterations in vegetation (due to road
openings and terrain clearings), as well as by changes in
the landscape. These effects are predicted and
controlled through environmental impact assessment
procedures and internal environmental management
procedures, which include -even when not required by
law- the identification of environmental aspects,
including the impact on biodiversity during the design,
construction, and operation phases of the lines, as well
as legal requirements and operational inspections,
which are performed by Iberdrola Ingeniería within the
context of a process certified as compliant with the
UNE-EN ISO 14001:2004 standard.
In the operation and maintenance phase, the principal
impacts are caused by the coexistence of the lines with
avian fauna and with vegetation. For the avian fauna,
the impacts occur primarily on old-configuration lines
and in certain areas, because the new developments
include designs intended to minimize these effects.
To manage fauna and flora during the distribution
phase, a geographic information system has been
combined with the operation and maintenance systems
of the business division, to provide a foundation for the
development of an environmental management tool
that makes it possible to identify the risk points, locate
them geographically, analyze the causes (based on the
condition of the environment), and adopt preventive
measures for new developments.
Similarly, an organized inventory of fauna has been
established, based on the national and autonomous
catalogs and on the WCU Red List. This internal
inventory, available to everyone responsible for
distribution maintenance operations, identifies each
species with photographs, indicates its level of
protection (in danger of extinction, sensitive to changes
in habitat, vulnerable, or of special interest) and
provides information about its problems with respect to
electrical power lines and about its habits and habitats.
The focus of biodiversity management during the
distribution phase is particularly focused on reducing
the incidence of events involving avian fauna and
vegetation.
Notable during 2006 were the results of the white stork
habit-change pilot project. Field monitoring performed
during the fiscal year confirmed that a bird that had been
moved to an artificial nest built a similar artificial nest,
and the adults whose chicks were transferred from the
towers or pylons to new artificial nests returned there to
raise the chicks.
Similarly, an experimental campaign was conducted to
install a new type of cable-support crosspiece (developed
internally in collaboration with the WIGEVASA company)
in the medium voltage electrical pylons, in order to
prevent storks from building their nests in dangerous
areas, thereby preventing their electrocution and the
resulting interruptions in the supply of electrical power.
The new model, as installed at various points in the
Salamanca and Zamora rural network, consists of a metal
crosspiece that makes it difficult for storks to arrange and
secure the initial pieces required to build their nests.
One highlight of the projects developed in conjunction
with third parties consisted of the wire insulation
activities performed in the province of Toledo pursuant to
the cooperation agreement with the Spanish
Ornithological Society (SEO/BirdLife) in the campaign
sponsored by this NGO to insulate certain electrical power
lines deemed hazardous to Bonelli’s Eagle. This project
represented a fruitful collaboration between the
Company, the NGO, and the government (Governing
Council of Castilla-La Mancha), sharing information on the
history of incidents, environmental risks, etc., with the
goal of determining the highest-priority actions.
Another highlight was the agreement signed by
IBERDROLA Distribución with the Ministry of the
Environment and the Provincial Government of
Extremadura, which was notable for its commitment to an
overall investment of 800,000 euros in measures for the
modification of electrical power lines, with the goal of
preventing the risk to birds. IBERDROLA Distribución
contributed half of this amount.
Renewable energy
In the case of renewable energy facilities, the strong
growth of wind farms in recent years stands out. Unlike
the Company’s other installations that existed prior to
the declaration of protected spaces, the wind farms
post-date them. This situation entails restricted
development of projects in these areas. Consequently,
the presence of wind installations in biosphere
reserves, national parks, RAMSAR spaces, and natural
parks is an exceptional situation.
129
Throughout the design phase of the facilities, studies
are being conducted to determine the configuration of
the facility that best suits its location. Accordingly,
studies are performed to measure noise, analyze
vegetation, or monitor fauna, to help ensure the best
environmental integration of the facilities and, by
extension, of the activity. These projects extend
throughout the operational period of the facility,
because they are performed according to the
specification set forth in the respective conditions.
These aspects are considered in the environmental
impact assessment processes, which are carried out with
the participation of Iberdrola Ingeniería within the
context of a process certified as compliant with the
UNE-EN ISO 14001:2004 standard.
Awareness
In 2006, a cooperation agreement was signed with
Fundación Tormes-EB to create the IBERDROLA
Environmental Classroom [Aula IBERDROLA de medio
ambiente], the goals of which are to create an ongoing
IBERDROLA environmental training class with high
educational quality, geared toward training future
environmental engineers within the country, and
transforming it into a forum for debate and national
reference on the subject. Throughout 2006, three course
were offered: interpretation and use of natural spaces,
restoration of riverbanks and spaces and environmental
communication. The level of acceptance of the courses is
evidenced by the fact that spaces are filled within three
days from the commencement of registration. Similarly,
the attendees’ level of satisfaction has been outstanding,
with over 75 students participating in the courses.
Latin America
In Mexico, there are no IBERDROLA facilities in
protected areas. The Company has continued the
project to restore the saline environment of the estuary
and its biodiversity by discharging seawater in the
industrial port of Altamira. The impact of the activities
of affiliated Latin American companies in 2006
remained outside the scope of IBERDROLA’s
management capacity.
21. Does not include the values of the cogeneration facilities.
130
OTHER INDICATORS
Consumption of chemical products
The information provided in this section refers to the
chemical products used in the combustion processes(21)
-primarily derived from the tasks consisting of the
treatment of fumes and effluents, and the adaptation of
the processes- that are most representative, both
quantitatively and qualitatively, because of their possible
effect on the environment (see table 48).
TABLE 48
Consumption of chemical products
(kg)
2006
IBERDROLA Spain
Sulfuric acid
4,556,107
Ammonia
26,581
Sodium hydroxide
1,041,283
Sodium hypochlorite 3,195,993
Sulfuric acid
2,510,387
Ammonia
19,675
Sodium hydroxide
399,458
Sodium hypochlorite 896,187
2005
2004
4,083,313
38,333
1,227,573
4,038,662
4,262,400
25,349
896,589
2,711,324
2,219,622
15,771
167,317
1,566,187
1,879,386
3,370
134,003
1,160,725
Water
TABLE 50
Consumption
The principal water consumption at IBERDROLA’s facilities
is due to evaporation during the cooling process at
thermal power plants.
According to table 49, the volume of continental water
consumed in Spain to cool combustion plants is
34,495,818 m3. The volume consumed for processing
water and auxiliary services at such plants was 5,967,210 m3
of continental water.
Data on the discharge volume is the cooling return water
plus effluents from the treatment systems. These volumes
of flow unite in the same collector and are discharged into
the recipient. Water that has evaporated during the
process is deemed to be consumed during cooling.
Fifty-eight percent (58%) of cooling consumption in Spain
corresponded to the Cofrentes nuclear plant whose water
consumption remains stable from year to year due to the
fact that there are no significant variations in its
production or in the ratio of water consumption to
electricity generated (m3/GWh).
With regard to the remaining plants, the consumption of
the new combined cycle plants is much more efficient than
that of traditional thermal power plants (see table 50).
Therefore, the replacement of traditional thermal power
plants with new combined cycle technologies has meant a
decrease in water consumption for electricity generated.
This trend will continue in the next few years as a
consequence of the progressive replacement of
technologies under the 2007-2009 Strategic Plan.
Specific consumption of cooling water by
technologies. IBERDROLA Spain
(m3/GWh)
2006
881
1,539
2,169
Thermal power plants
Nuclear power plant (Cofrentes)
Chart 41 on page 117 regarding water consumption
shows the decrease in the ratio of water consumed in
cooling for thermal combustion in Spain between 2004
and 2006. To calculate the specific consumption ratio in
cooling-thermal mix in Spain, only plants which
consume water through evaporation in cooling (closed
system) and their respective production have been
taken into consideration(22).
In 2006, the specific cooling consumption decreased
with respect to 2005 despite the increase in energy
production of the plants with closed cooling systems,
such as the Arcos de la Frontera combined cycle plant.
In future years, new combined cycle plants will be
placed in service in Spain and Latin America. Thus, the
trend is for a further decrease in water consumption for
cooling purposes.
Specific consumption of cooling water has
decreased
TABLE 49
Water use (2006)
m3
COLLECTION
CONSUMPTION
Process and auxiliary
services
34,356,164
5,515,555
33,889,194
4,236,878
466,970
1,278,675
9,679,422
1,197,300
1,012,348
7,881,961
1,797,461
184,952
71,228,624
7,366,735
5,452,753
68,905,284
2,323,339
1,913,982
DISCHARGE
Cooling
IBERDROLA Spain
Cogeneration
Cogeneration(**)
IBERDROLA Group
Cogeneration
1,489,315,015
1,486,978,010
2,337,005
32,006,483
29,795,009
2,211,474
2,220,090,528
2,215,016,089
5,074,439
1,449,433,295
1,448,851,938
591,359
21,129,761
20,900,700
229,061
2,141,473,364
2,140,636,246
837,118
(*) Does not include figures from Altamira V, which began commercial operation in 2006.
(**) Does not include the use of water by the cogeneration facilities of Energy Works Brazil and Capuav.
22. Includes thermal power plants, combined cycles, cogeneration and the Cofrentes nuclear power plant.
131
Effluents
All combustion plants in Spain have treatment systems
that treat residual water prior to discharge into the
environment (sea, reservoir, or river). Water from the
process undergoes a physicochemical treatment, which
includes the separation of hydrocarbons. Wastewater is
treated in compact treatment systems with biological
aerobic processes. And coal plants have a treatment
system for slag from the plant, which consists of a
decantation-coagulation process, preventing the entry
into the recipient water of particulate coal or coal in
suspension.
During the 2005-2006 period, a plan was implemented at
the combustion plants to minimize the risks of discharge
and improve its quality. Treatment facilities were
established and improved for this purpose. Optimization
of the drainage network of the Velillla plant, at a cost of
1.5 million euros, is noteworthy. Networks were unified
and the number of discharge points were reduced.
In thermal combustion plants, large volumes of water
are collected for the cooling process. When this is in a
closed system, part of the water, normally freshwater,
evaporates and the remainder is returned to the
environment without significantly altering its
physicochemical characteristics. Most plants with an
open cooling system collect water from the sea and
virtually all of it is returned.
IBERDROLA’s combustion plants in Spain and Latin
America monitor effluent quality, with continuous pH,
conductivity, and turbidity measurements. Monthly or
quarterly analyses are performed through an accredited
body and reported to the government. The total values of
the most representative parameters obtained during the
2006 fiscal year are shown in tables 52 and 53.
In both systems, closed and/or open, water that returns
from cooling dilutes the process water and wastewater,
which is treated in advance, ensuring that the
contaminant load of the discharge is minimal. In
addition, despite an increase in temperature, it does not
negatively affect the natural recipient because of its
dilution effect (see table 51).
At nuclear plants, there is exhaustive monitoring of the
process water and wastewater, which is treated, stored and
subsequently discharged periodically under the control of
a representative of the Júcar Water Commission.
The majority of cogeneration facilities are associated with
an industrial process and the party responsible for water
management is specific to the process. Therefore, no
information on the quality of the water is provided.
TABLE 51
Origin of the water collected and discharge location of effluents from generating facilities.
IBERDROLA Spain (2006)
Aceca combined cycle(*)
Origin of the cooling
water
Tajo River
Arcos combined cycle (*)
Gudalcacín Reservoir
Castellón combined cycle(**)
Castejón combined cycle(*)
Santurce combined cycle**)
Cofrentes nuclear plant(*)
Aceca thermal power plant (50%)(*)
Mediterranean Sea
Ebro River
Cantabrian Sea
Júcar River
Tajo River
Castellón thermal power plant(**)
Escombreras thermal power plant(**)
Santurce thermal power plant(**)
Lada thermal power plant(*)
Pasajes thermal power plant(**)
Velilla thermal power plant(*)
Mediterranean Sea
Mediterranean Sea
Cantabrian Sea
Nalón River
Cantabrian Sea
Carrión River
Origin of the process water
and auxiliary services
Tajo River / Sewer
Villaseca de la Sagra
Gudalcacín Reservoir
Underground collection
Ebro River
Urban network
Río Jucar
Tajo River / Sewer
Villaseca de la Sagra
Underground collection
Urban network
Urban network
Nalón River / Urban network
Urban network
Carrión River
Origin of the process water
and auxiliary services
Tajo River / Sewer
Irrigation Channel /
Majaceite River
Mediterranean Sea
Ebro River
Cantabrian Sea
Jucar River
Tajo River
Mediterranean Sea
Mediterranean Sea
Cantabrian Sea
Nalón River
Cantabrian Sea
Carrión River
(*) Combustion plants that are cooled with continental water also have their discharge point in continental waters, which does not significantly alter the
physicochemical characteristics of the recipient.
(**) Combustion plants with an open cooling system collect and discharge in the sea.
132
TABLE 52
Effluents (parameters). BERDROLA Spain (2006)
Ph (average)
Solids in suspension (Kg)
DBO5 (Kg)
DQO (Kg)
NTOTAL (Kg)
PTOTAL (Kg)
7.84
94,747
41,952
210,170
71,920
2,900
Plans to minimize the risk of spills at generating facilities
are implemented within the framework of activities to
improve the thermal, combined cycle and hydroelectric
plants. In distribution, there is also a plan to minimize the
risk of spills, within the framework of which 43 oil sump
deposits were built at substations in 2006.
TABLE 55
Accidental spills
Data corresponds to the effluents from the combined cycle and thermal power
plant treatment systems. It is expressed in (kg) taking into consideration the
effluent (m3/year) and concentration (kg/m3) of each parameter.
(number/year)
IBERDROLA Spain
TABLE 53
Effluents (parameters). IBERDROLA Latin America
(2006)
Ph (average)
Solids in suspension (Kg)
DBO5 (Kg)
NTOTAL (Kg)
PTOTAL (Kg)
7.7
239,107
25,341
57,018
19,006
In the case of Latin America, the Monterrey and Laguna plants treat water, which
they collected for their use and return in better condition, for which reason they
do not add contaminants. The Altamira III and IV plant does not have a treatment
system, and the figures are those shown in the table. Figures for Altamira V,
which began commercial operation in November 2006, are not included.
Activities resulting in improved water consumption levels
at offices (see table 54) include most notably the
progressive transfer of a large percentage of the staff in
Spain to new, more efficient corporate buildings and
awareness campaigns at these offices.
2006
0
0
2005
1
0
2004
1
0
Waste
Chart 39 on page 134 describes the origin of the waste
produced at the Company.
The most typical waste produced by the combustion
process at thermal power plants consists of fly ash, slag
and nuclear waste. Of the former, 401,490 tons were
produced in 2006, 92.20% of which was reused in cement
production and as filler material in infrastructure projects.
Similarly, 46,602 tons of boiler slag were produced, which
were processed for disposal.
The production and reuse of these ashes (which are only
produced in coal-fired plants) is shown in table 56 below.
TABLE 56
Production/reuse of ash from thermal power plants.
IBERDROLA Spain
TABLE 54
Year
Water consumption at offices and facilities
(m3/year)
IBERDROLA Spain
IBERDROLA Group
2006
199,624
278,208
2005
217,819
290,580
2004
188,406
302,023
Accidental spills
The information provided in table 55 below
corresponds to accidental spills occurring at facilities
and companies managed directly by IBERDROLA and
at those where it holds a 100% interest.
2006
2005
2004
Ashes
produced (t)
401,490
534,720
560,300
Ashes
reused (t)
370,170
471,780
508,770
%
reused
92
88
91
The Company’s efforts in recent years to increase the
percentage of ash reused is noteworthy. Thus, the
2005-2006 period saw reuse increase from 43.73% to
92.20% of the total produced, which represents a twofold
increase in reuse during the period. Similarly, and as a
reference, the European electric industry produces an
annual average of 43.5 million tons of fly ash,
approximately 50% of which it reuses in the construction
sector (Source: European Coal Combustion Products
Association (ECOBA) data for 2004, www.ecoba.org-).
133
In 2006, 57% less ash was produced than in
2000, and its reuse doubled
With regard to the nuclear plants, they produce radioactive
waste which is treated, in Spain, in accordance with the
General Plan for Radioactive Wastes, which the government
approves, and which the Empresa Nacional de Residuos
Radioactivos (Radioactive Waste Management Company)
(ENRESA), created in 1984, puts into practice. The processing
of this waste is regulated by a broad legal framework, which
specifically considers all activities related to the processing
and financing thereof.
Of all the radioactive waste nuclear plants produce,
approximately 99% is intermediate and low level
(with negligible heat emission), and only 1% is high-level
waste (with substantial heat emission).
Low- and intermediate-level waste is stored in a plant
intended exclusively for this purpose in El Cabril, Córdoba,
which is managed by ENRESA. Radioactive waste from
hospitals, universities and research centers is also stored at
this facility. As for spent fuel, after it is removed from the
reactor, it is considered a high-level waste and temporarily
placed in the plant’s own pool. Because the capacity of these
pools is limited, the solution set forth in the VI General Plan
for Radioactive Waste is to have Interim Centralized Storage
[Almacén Temporal Centralizado] (ATC) for all Spanish plants.
In 2006, the Cofrentes plant produced a total of 161.70 m3 of
intermediate- and low-level radioactive waste, i.e., ready for
deposit into the storage facility at El Cabril. The development
of a plan to minimize its intermediate- and low-level
radioactive waste is among the notable activities performed
during the fiscal year.
The rest of the nuclear plants in which IBERDROLA has an
interest produced 131.34 m3 of intermediate and low-level
radioactive waste (a figure corresponding to the percentage
interest owned by the Company).
Hazardous waste
Various areas of the Company carry out activities designed
to minimize and improve processing of hazardous waste
that is produced. The following stand out among the
objectives established in 2006:
• Those established by the distribution organization to
minimize the risk of spills at electric transformer
substations, which has translated into the construction
or remodeling of 43 oil collection sumps and also the
removal and decontamination of power transformers
with PCB levels over 500 ppm and capacitor banks.
Treatment
Assessment
CHART 49
Waste at IBERDROLA
Urban waste:
• Urban or similar to urban
• Inert (ashes, slag, debris from work sites,
etc.)
ENERGY PRODUCTION
TRANSMISSION, TRANSFORMATION, AND DISTRIBUTION OF ENERGY
GENERAL SERVICES
CONSTRUCTION,
OPERATION, AND
MAINTENANCE OF
FACILITIES
Hazardous wastes:
• Fuel-oil and/or gas-oil residues
• Oils
• PCBs
• Impregnated materials
• Ash
Nuclear waste:
• Medium- and low-intensity
Treatment
134
Treatment
Assessment
• Those established by the renewable energy
organization to improve the processing of oils, which
have translated into technical and financial analysis for
the use of oils other than those currently used, which
are characterized, for example, by a longer useful life,
as well as the implementation of a pilot experiment
consisting of changing oil from wind generators using
tanker trucks, thereby reducing the number of oil
transfers and storage thereof at the facility, with the oil
being processed simultaneously with its removal.
CHART 50
PCBs pending elimination in Distribution
(t)
6,601
5,803
• The one established at all Mexican facilities to reduce
the creation of oil-impregnated materials by 10%
compared with the previous year.
3,754
2004
2005
2006
The evolution of hazardous waste generation is described
in the table 57 below.
TABLE 57
Hazardous Waste Generation
Hazardous Waste (t)(*)
2006
IBERDROLA Spain
7,796
IBERDROLA Latin America 176
IBERDROLA Group
8,653
2005
10,549(**)
200
11,024
2004
4,298
1,875
4,751
Efficient products and services
The energy provided in 2006 to the Company’s users
(i.e., regulated and deregulated businesses) comes from
the wholesale electricity market, which includes energy
from the Spanish mainland electric power system. The
primary sources of energy for the mainland electric
power system(23)in 2006 were the ones shown in
chart 51:
(*) The hazardous wastes specified do not include PCBs.
(**) Increase due to the cleanup of ditches close to the fuel-oil tanks of the
Escombreras thermal power plant and excavation of a new water
circulation channel of the combined cycle plant.
CHART 51
Primary energy source of the peninsular Spanish
electrical power system (2006)
(%)
Elimination of PCBs
With regard to polychlorobiphenyls (PCBs), these
substances are not produced by any of the Company’s
activities, but rather are sold by the manufacturers of
electrical equipment and are used mainly in transformers
and capacitors, due to their excellent dielectric properties.
Because of their harmful effects, they must be eliminated
by their owners by the dates specified in applicable
legislation (2007 in the Autonomous Community of
Valencia and 2010 in the rest of the country). The
Company’s possession of PCBs is limited to Spain, mainly
in the distribution area, with only a residual amount of
six tons pending elimination in the generation area.
As shown in chart 50, the rate of PCB elimination
increased in the distribution area to 35.32% in 2006, as
compared with 12.09% the previous year, thereby
reducing the environmental risk that these substances
entail.
Natural gas: 23.3%
Nuclear: 22.2%
Coal: 24.4%
Fuel-oil/gas: 2.2%
Cogeneration and waste: 7.8%
*Renewables: Hydroelectric 10.8%, wind 8.4%, and others 0.8%
Besides electricity, IBERDROLA and its subsidiaries
provide to their customers a wide range of products and
services that promote energy efficiency and savings.
Table 58 on the next page presents those offered in
Spain. In the framework of the Global Environmental
Management System certified during the fiscal year, the
organization responsible for selling these products and
23. These sources correspond to the structure of the peninsular Spain electric system from which the distribution and marketing companies take energy. They are not the
IBERDROLA production sources shown in the section Operating Information, among which renewable technologies and more environmentally efficient thermal
production sources account for a much higher presence.
135
services established a system which analyzes energy
efficiency, science and eco-design in products and services
provided by its suppliers, and these aspects are a mandatory
assessment criterion for evaluating the Company’s offerings.
Compliance
The information provided in this section concerns legal
proceedings commenced against companies managed
directly by IBERDROLA and its 100%-owned subsidiaries.
TABLE 58
Primary energy savings by product/service.
IBERDROLA Spain
(MWh/year)
Solar photovoltaic energy
Lighting flow regulators
Energy Management System
Audits with energy savings
Measurements adopted(*)
Total savings (MWh/year)
2006
5,342
487
1,666
10,244
2005
9,000
0
4,000
ND
17,739
13,000
(*) Includes audits within the framework of the Demand Management Program
conducted by the Supply and Distribution areas.
In 2006, 807,573 MWh of green energy were also supplied
in Spain.
Additionally, audits and energy plans were presented
(without the adoption of efficiency measurement
activities) with an estimated savings of 4,012 MWh/year.
Other efficiency measures consisted of the distribution of
69,693 guides on efficient energy use, the installation of
efficient air conditioning and heat pump equipment, and
campaigns for energy conservation and efficiency.
With regard to the recovery of waste or byproducts from
goods or services provided to users, the principal
product (electricity), does not generate any kind of
reusable waste.
Bioclimatic architecture
In Spain, Iberdrola Inmobiliaria is promoting
285 semi-detached individual housing units, a complex
of 399 block housing units, four 21-floor office
buildings with a total above-ground area of 91,000 m2
and below-ground area of 42,000 m2 and a renewable
energy center for IBERDROLA. All of these
developments are designed using bioclimatic and
ecological criteria, taking into consideration factors
such as the orientation of the housing units,
cross-ventilation, thermal inertia, differentiation of
façade spaces, heat collection elements in the winter
and natural lighting, reuse of gray water, etc., using
136
ecological materials, landscaped terraces, efficient
equipment and renewable energy. And they entail an
overall investment (budget allocation) of 213,252,247
euros.
Thus, in 2006, legal proceedings were initiated against
IBERDROLA in connection with the distribution activity in
Spain. This action, which was brought in a Madrid court
pursuant to a petition relating to electromagnetic fields at
a transformer station, is in the processing phase.
With regard to proceedings pending resolution, the
following proceedings have occurred:
• An administrative disciplinary proceeding for
nonperformance due to failure to submit the
standards for fire prevention in Barxeta and Valencia
and for the line from Vilanova to Gandia is pending
resolution.
• Appearance in a criminal proceeding before the
jurisdictional body in Móstoles, Madrid for a claim
relating to electromagnetic fields around the
transformer station of a facility located in Móstoles,
Madrid.
• Advance investigations in before the jurisdictional
body in Collado Villalba, Madrid regarding a fire that
occurred in 2005 at property located in Torrelodones,
Madrid.
Investments and expenses
53,280 thousand euros in expenses were incurred in
2006, including those arising from direct and indirect
activities with an environmental component as well as
those relating to ecological fees and taxes. The costs of
human resources dedicated to these activities are also
taken into account. Direct investments during the
2006 fiscal year totaled 94,216 thousand euros, of which
environmentally-friendly technologies account for
7,790 thousand euros.
As for possible environmental contingencies that may
arise, the Group believes that they are sufficiently covered
by the civil liability insurance policies that it has obtained
and reserves that it has created for such purposes.
Specifically, 255,776 thousand euros have been provided
as a reserve for the purchase of emission rights.
TABLE 59
Environmental Expenses
2006
IBERDROLA Spain
49,483
IBERDROLA Latin America(*) 3,797
IBERDROLA Group
53,280
(Thousands E)
2005
2004
72,630
43,363
7,141
79,771
43,363
(*) Includes data on the Company’s activities in Brazil. This information is not
available for 2004.
TABLE 60
Environmental investments
IBERDROLA Spain
IBERDROLA Latin America(*)
IBERDROLA Group
2006
94,216
94,216
(Thousands E)
2005
2004
59,057
63,836
59,057
63,836
(*) Information not available.
In addition to amounts relating to expenses and
investments that are completely environmental in nature,
other activities took place that could be characterized only
partially as environmental, for which reason they do not
appear in the financial accounting system under the
purely environmental headings.
Bases for preparing the information
The section entitled “Commitment to Sustainable
Development” contains information about the coverage
of the environmental information, the bases for its
preparation, the environmental interest groups of the
organization, details on the subjects relevant thereto
and the standards for ultimately determining those that
are considered essential. In addition, the process for
identifying and specifically selecting the environmental
groups to which the Company is committed is
presented below.
The result of the analysis of groups having an interest in
the Company’s environmental management and the
basic fields of activity for each of them were crossreferenced with an analysis of the ones with which the
Company was interested in having a relationship and of
the key areas for the Company. Based on this analysis, it
was decided to encourage the creation of a framework
of mutually beneficial relations in these key areas with
organizations with which collaboration is possible.
Working meetings, telephone conversations, and surveys
are conducted with these organizations, and some of
them sign collaboration agreements and, in some cases,
framework agreements, which subsequently develop
into specific agreements. Sporadic contacts are also
established with other organizations with which a stable
relationship is not maintained.
The environmental information compiled in this chapter
has taken into consideration the expectations of
environmental groups to which the Company is
committed and is focused on the principal environmental
matters that affect IBERDROLA’s activities. It is structured
into two well-differentiated parts. The first part describes
the management model and strategy, and the second part
is related to the performance indicators and management
focus of each one, in both cases providing information
about the activities of the companies managed directly by
IBERDROLA and by other companies within the Group
(subsidiaries), with primary emphasis on the former.
The environmental mailbox at [email protected],
is available for any suggestions, questions or clarifications
regarding the environmental information included in this
report. The contact person for this information is Carlos
Fernández Briones, the Corporate Environmental and
Quality Director, who can be reached by telephone
at 915 77 65 00.
137
Commitment to
people
The achievement of its growth and profitability goals
allows IBERDROLA to ensure the creation of value for
shareholders, customers, employees, suppliers and,
ultimately, for society as a whole. The Company is
aware of its responsibility as an engine for
development and progress and of the obligations
stemming from its commitment to best practices in
social, labor and environmental matters. The
consistent and balanced response to the demands of
the interest groups to which it is related entails,
among other actions, providing an excellent work
environment for our employees, offering competitive
returns to our shareholders, applying the best
corporate governance and transparency policies and
providing the best energy services to our customers.
IBERDROLA also devotes significant resources to
initiatives aimed at the socio-economic development
of our surroundings in the fields of art and culture,
education and training, community service, and the
environment.
SOCIAL INFORMATION
Human Resources
Shareholders and the financial community
Regulatory Authorities
Customers
Suppliers
The Media
Society
HUMAN RESOURCES
• Strengthen the motivation of its employees through
transparent information, internal communications,
training and on-going promotion.
Labor practices, work ethics and human rights
The IBERDROLA Group has established a relationship with
its employees that respects the principles on which the
following declarations and initiatives are based:
• The Universal Declaration of Human Rights.
• The Tripartite Declaration of the International Labor
Organization on Principles concerning Multinational
Enterprises and their Social Policy, which covers four
areas: freedom of association, trade union freedom
and right to collective bargaining; elimination of
forced or compulsory labor; abolition of child labor
and elimination of discriminatory practices in respect
of employment and occupation.
• The OECD guidelines for multinational enterprises.
• The United Nations Global Compact.
To put its commitments into practice, the IBERDROLA
Group has a Code of Professional Conduct that establishes
the standards to guide the conduct of its employees. In
addition, under the Ten Guidelines for Responsible
Behavior, wholly-owned companies in Spain pledge to:
• Respect all human rights and, in particular, those
whose violation degrades workers as a group, rejecting
child labor and forced or compulsory labor.
• Develop a favorable framework of labor relations based
on equality of opportunity, non-discrimination and
respect for diversity, promoting a safe and healthy
environment and facilitating communication with the
workforce.
To complete the foregoing initiatives, the IBERDROLA
Group has a Quality Policy in place that recommends the
following in the area of human resources:
• Recognize individual achievements and encourage
teamwork.
• Carry out all activities establishing the safety of
employees as a basic requirement.
• Foster a culture of prevention.
The information provided below on IBERDROLA Group’s
personnel refers to companies within the corporate group
described in the “Characteristics of the Sustainability
Report” Exhibit, which also describes the rules applied in
the consolidation of such information.
More detailed information on the various items dealt with
herein is provided in the “Supplemental information”
Annex, which includes information relating to the last
three fiscal years.
Objectives and policy
Most companies of the Group have collective bargaining
agreements in place that govern matters relating to
employment, labor relations, health and safety, training,
and equality of opportunity. Taking as a reference the
III Collective Bargaining Agreement of the IBERDROLA
Group, which affects over 2/3 of the personnel of the
Group companies mentioned above, it defines the
objectives and policies that apply to the various spheres of
employees’ working life.
Employment
The following are IBERDROLA’s principal commitments to
employees in connection with employment:
• Maintenance of employment, guaranteeing the
existence of stable and high-quality jobs, with
occupational content that guarantees the on-going
enhancement of employability.
• Foster on-going improvement in the management of
all Company processes and activities.
139
• The establishment of specific employee rotation
measures to achieve organizational efficiency
improvements.
• Integration of prevention standards throughout the
organization.
• Permanent improvement of the prevention system.
• The integration of workers with disabilities, who will
render their services on terms that guarantee
application of the principle of equal treatment, to
ensure their professional advancement.
Relationship of the company with its employees
The main elements that define the relationships of most
companies with their employees are the following:
• Establish work organization, define the occupations of
persons, establish their duties, set the procedure to
assess occupations and facilitate the accommodation
of workers with diminished capacity.
• Define the terms for hiring and promoting employees.
• Regulate the work regime, working hours, vacation
and leave.
• Define the salary structure, supplemental pay and
other expenses and establish the form of payment.
• Establish the characteristics of the Social Security
System supplemental to the General Social Security
System for companies having a Supplemental
System.
• Manage the conditions for obtaining certain Social
Benefits, setting amounts, periods, requirements, etc.
• Coordinate social and labor relations, the actions of
Labor Union Sections [Secciones Sindicales], the
duties and responsibilities of union representatives,
etc.
Occupational risk prevention and health
protection
The importance attached to this issue, above and
beyond compliance with current regulations, leads to
the on-going monitoring of preventive activities to
identify, evaluate and control those risks that cannot be
avoided in order to minimize occupational accidents
and illnesses.
To that end, and to work towards a zero-accident goal, the
IBERDROLA Group has an occupational risk prevention
plan that is based on the following:
140
• Promotion of training and social participation.
• Increase in preventive monitoring of outsourced
work.
As regards occupational health, the Company’s in-house
medical services are responsible for monitoring the
health of employees through regular medical check-ups
and vaccination campaigns to prevent specific diseases,
and for providing health care.
Training
The companies within the Group attach the utmost
importance to training, and consider it to be a vital
element in facilitating the effectiveness and efficiency
of employees in the performance of their duties,
providing them with on-going adjustment to the
requirements of organizational and technological
change, thereby strengthening their aspirations for
promotion.
The companies provide the required means of training
and employees undertake to gain the necessary
knowledge and skills to update their professional
qualifications by attending all events organized for such
purpose.
The companies state, in their respective collective
bargaining agreements, the importance of training as a
key element for the development of persons, updating
their knowledge to enable them to address their current
and future professional responsibilities.
Diversity, non-discrimination and equality of
opportunity
Following its adherence to the Global Compact, the
IBERDROLA Group intensified activities in this area, and
pledged that its actions and those of its professionals
would be conducted on the basis of procedures that
ensure the elimination of any discrimination for reasons
of race, color, sex, language, religion, political opinion,
national or social origin, social status, status as a
member of an indigenous people, disability, health,
marital status, pregnancy, sexual orientation or other
personal condition that is unrelated to job-performance
requirements.
SOCIAL INFORMATION
In 2006, the company obtained the
Family-Responsible Company certificate
Aware of the problems faced by working professionals
in reconciling their work and the care of small children,
the IBERDROLA Group wants to help make both
compatible with a successful professional career. Thus,
in 2003 it implemented a maternity and family support
policy, which exceeds the rights afforded by current
Spanish legislation and is based on two very specific
measures:
• A 15 calendar-day paid leave, to be taken prior to the
expected date of delivery. Since its introduction,
77 employees have taken advantage of this leave.
30 people were taking advantage of it as of the end
of 2006.
• A flexible five-hour working day starting on the
expiration the statutory maternity leave and during
the period remaining until the first anniversary of the
delivery date, with full salary. 159 persons have
benefited from this measure since it was introduced.
77 people were taking advantage of it as of the end of
the year.
• These two measures are also being applied at the
following companies: Iberdrola Ingeniería y
Construcción, Iberdrola Energías Renovables and
Iberdrola Operación y Mantenimiento.The Code of
Conduct provides that the IBERDROLA Group will
respect and promote non-discrimination, applying a
universal recruitment policy based on the merits and
qualifications of candidates and guaranteed by the use
of systems for the assessment of goals that are based
strictly on professional standards.
The compensation models of the companies establish fair
salaries based on the level of responsibility of the
professionals involved, defined by categories, and on the
employees’ performance.
In addition, in order to give effect to the principle of nondiscrimination, whenever there are workers who for
medical reasons have diminished capacity for the
performance of their current duties, but who do not
obtain a declaration of permanent disability, the
IBERDROLA Group will appoint them to fill the vacancy
that is most suitable for their qualifications and
knowledge, maintaining their original category.
Human rights in the workplace
Together with the principles of non-discrimination and
equality of opportunity mentioned in the previous
section, the Group’s companies in Spain or in Latin
American countries must guarantee that they respect and
comply with the principles of freedom of association and
collective bargaining, of protection of ethnic minorities
and of rejection of child labor and forced or compulsory
labor, extending such obligation to all their
subcontractors.
Responsibilities within the organization
For all matters relating to the management of the persons
of the IBERDROLA Group, the highest-ranking manager is
the Director of Corporate Resources. There are three
divisions reporting to him, whose powers and duties cover
specific management aspects: the Labor Relations and
Organization Division, the Professional Development
Division and the Compensation Division.
There are human resources divisions at Group companies
that report to the Director of Corporate Resources,
established to manage humnan resources more closely
and efficiently.
Owing to the importance attached to prevention by the
IBERDROLA Group, responsibility for this matter lies
directly with the senior managers of the various business
divisions making up the Company.
Training and awareness-raising
The principal strategic objectives of the IBERDROLA
Group’s Training Plan, which is applicable to all of the
Group’s companies, are:
• Increase employee motivation by promoting equality
of opportunity.
• Create a climate of continuous learning, where the
employee is responsible for his/her own development.
• Increase the employability of all workers.
• Improve the company’s profitability and
competitiveness, job stability and sustained social
development, optimizing all available resources.
• Boost efficiency and reduce risk in the use of available
equipment, and enhance the quality and safety of
supply, with particular respect for the environment.
141
• Attend to training in new fields of activity relating to
the introduction of new technologies, new production
systems, the use of alternative primary sources of
energy, new businesses, etc.
Within this overall framework, most of the companies lay
particular stress on training relating to safety and
prevention of occupational accidents and care for the
environment.
The content of the training plans is linked to the
development of different types of competencies:
• General competencies aimed at improving the
behavior and attitudes of all of the company’s
professionals, regardless of their professional duties.
• Technical competencies specific to each business unit
and each job.
Such content also includes aspects relating to the
internationalization process currently underway at the
IBERDROLA Group and which requires that its
professionals acquire knowledge related to legislation,
language, etc., as well as the necessary administrative and
management skills in an environment that is entirely new
for them.
Training activities are developed and taught under the
following formulas:
• Designed with company or third-party resources.
• Taught with the company’s own resources or
outsourced.
the Audit and Compliance Committee of the Board of
Directors.
In May 2006, the IBERDROLA Group received the
Family-Responsible Company Certificate, under Standard
1000-1, awarded by Fundación + Familia and endorsed by
the Ministry of Labor and Social Affairs. Such certificate
recognizes the entities that have made the greatest
contribution to reconciling personal life with working life
and recognizes the promotion of gender equality by the
Company.
In the certification process, the IBERDROLA Group
stood out for its rigor in defining, applying and
communicating to its employees the measures to
reconcile working life with family life and to support
the family.
In the prevention area, a legal audit was conducted in late
2006. Certificates of having passed the statutory audit,
effective for two years, were delivered in 2006. The
Company also received certificates showing that it has
passed the prevention management system audit in
accordance with the OHSAS 18001 standard.
Such certificates are valid for three years. Both
processes were conducted for IBERDROLA, S.A.,
Iberdrola Generación, S. A. and Iberdrola Distribución S.A.
In addition, the first follow-up audit was conducted in
2006 and the auditor’s reports have yet to be delivered.
In 2006, Iberdrola Operación y Mantenimiento audited
its prevention management system in accordance with
the requirements of current legislation, and the
respective auditor’s report is pending delivery. It also
passed a second follow-up audit in accordance with the
OHSAS 18001 standard.
• Face-to-face, distance, mixed or on-line training.
• Group activities outside the classroom, etc.
Evaluation and monitoring of the degree of
compliance with the commitments assumed by the
company
The degree of compliance with the commitments assumed
by the IBERDROLA Group is verified through both internal
and external monitoring tools.
To monitor compliance with the Code of Professional
Conduct, applicable to all Group companies, the internal
audit division assesses and prepares an annual report on
the degree of compliance therewith. This report is
submitted to the Chairman & CEO of the Company and to
142
The IBERDROLA Group has been recognized as one of
the most outstanding companies because of its work in
preventing occupational risks in the industrial assembly
sector, and has received the award of the Asociación de
Empresas de Montajes Industriales (ADEMI) for such
work.
In connection with training, the IBERDROLA Group
undertook to assume the 34d National Agreement for
On-going Training [III Acuerdo Nacional de Formación
Continua] in accordance with Royal Decree 1046/2003
of August 1 and order TAS/500/2004 of February 13th.
The IBERDROLA Group complies with all statutory
requirements by virtue of such agreements, and receives
the recognition of the institutions in the form of
SOCIAL INFORMATION
incentives for training its professionals. In 2006 it
passed the inspections of the Tripartite Foundation for
Training and Employment [Fundación Tripartita para la
Formación y el Empleo], the Public Employment Service
[Servicio Público de Empleo] and the Ministry of Labor.
The IBERDROLA Group evaluates the effectiveness of its
training activities, in the first instance through
satisfaction questionnaires completed by all participants
at the end of training sessions and, in the long-term,
with the cooperation of the supervisors of the people
attending training events, through the analysis and
transfer of knowledge to the job, verifying improvement
in worker performance.
For comparison purposes, the foregoing table takes
into account the sale of AZERTIA and LANDATA during
the fiscal year. In net terms, 1,126 jobs were created
throughout the IBERDROLA Group, up 7.5% from
2005, as shown in chart 52:
CHART 52
Jobs created throughout the IBERDROLA Group
16,155
Finally, the IBERDROLA Group has development rules
under the Collective Bargaining Agreement which
govern the following monitoring committees: training;
promotion; job evaluation; social affairs and collective
bargaining and occupational health and safety. All of
them have been set up under the Collective Bargaining
Agreement and are made up of the same number of
representatives of the Company and of the labor union
sections.
Personnel
As of the end of fiscal year 2006, the IBERDROLA Group
workforce totaled 16,155 employees, with a breakdown as
shown in table 61.
+7.5%
15,029
2005
2006
Employment and diversity
The breakdown of the information provided in this and
the following sections, as already mentioned, refers to the
companies within the Group, with a consolidated
workforce of 12,995 workers.
There were 988 new hirings in 2006, 14% more
than in 2005
TABLE 61
IBERDROLA Employees
IBERDROLA Group(*)
Affiliates in Spain(**)
Affiliates in Latin America(**)
Total Group Companies
Azertia
Landata
Other
Total
Number of employees
2006
2005
2005
(Not incl. Azertia
and Landata)
8,130
8,252
8,252
2,070
1,696
1,696
2,795
2,753
2,753
12,995
3,160
12,701
0
0
2,328
12,701
1,995
160
2,328
16,155
15,029
17,184
(*) IIncludes IBERDROLA, S.A., Iberdrola Generación, S.A. and
Iberdrola Distribución S.A.
(**) Includes companies within the IBERDROLA Group.
The basic characteristics of the workforce are shown in
table, 62:
TABLE 62
Basic characteristics of the workforce
(2006)
Geographical
%
Sex
%
locations
Spain
78.49
Latin America 21.51
Professional
%
category
Men
Women
83.0
17.0
Manager
Univ. degree
Diploma holders
Professional
4.75
13.12
20.05
62.08
The professional qualifications and diversity of employees
improved in fiscal year 2006.
143
Chart 53 shows the increased percentage of degree and
diploma-holders employed.
CHART 53
Percentage of degree- and diploma-holders employed
(%)
48.20%
+1.94%
46.26%
2005
2006
The companies within the IBERDROLA Group believe
that high-quality employment is offered to personnel,
since 99.61% of jobs are full-time and 91.55% of contracts
are permanent.
The workforce is becoming somewhat younger, with a
trend towards a lower average age and shorter length of
service, which in 2006 stood at 42.62 years and
16.46 years, respectively.
One hundred percent of the managers of the companies
covered by the report are local; local manager means a
manger born in the country where the company by which
he is employed is established.
Personnel Turnover
In July 2003, the Office for Employment and Social Issues
[Dirección General de Trabajo y Asuntos Sociales] of the
Spanish government approved a Workforce Reduction
Plan applicable to companies located in Spain which fall
within the scope of the IBERDROLA Group’s III Collective
Bargaining Agreement, effective through December 2006.
The adoption and implementation of this universal,
voluntary and non-discriminatory measure is being
accomplished by means of on-going cooperation and
dialogue with the employees’ representatives and the
appropriate governmental authorities. During its effective
period (from August 1, 2003 through December 31, 2006),
1,700 workers were affected. In all cases, notice was formally
given to the interested parties and the specific
circumstances of each professional were taken into account.
144
The Workforce Reduction Plan was designed to ensure the
proper transfer of knowledge between persons and
thereby avoid the loss of human capital.
Concurrently with the adoption of this measure, the
IBERDROLA Group set in motion an Employment Plan
which provided for the generational replacement and
renewal of the workforce, offering opportunities to 680
new professionals. Following the conclusion of the
Workforce Reduction Plan, 964 professionals had been
hired by the IBERDROLA Group as of the end of 2006.
In 2006, the Company applied for an extension of the
Workforce Reduction Plan thorugh December 31, 2007,
taking advantage of the possibility afforded by such Plan
to extend the period of application thereof. Such
extension, which was approved in January 2007, carries
with it an Employment Plan with the commitment to
create 300 positions.
In 2006, there were 988 new hirings at companies within
the IBERDROLA Group, of which 25.43% were women.
Slightly over 34.08% of the managers and senior
technicians hired were also women.
There were 694 employee terminations in the fiscal year
as a result of retirements, resignations, dismissals, etc.
There is a clear difference between affiliated companies
and the companies of the IBERDROLA Group. Thus, at
affiliated companies, the greatest number of terminations
is concentrated in the younger age bracket. Conversely, at
the IBERDROLA Group there are hardly any terminations
until employees are closer to retirement age.
More detailed information on hirings and dismissals by
age, sex and geographical location may be found in the
“Supplemental Information” section.
Social benefits
The social benefits offered by certain IBERDROLA Group
companies to the majority of their employees exceed
those required to be provided under local legislation
in any of the countries in which such companies are
based. Such benefits may be the following: life
insurance; medial insurance; disability coverage;
pension fund; seniority bonuses; special assistance to
meet the needs of children and spouses; study aids for
children of employees; assistance for death in
occupational accident; special advances; apartments;
Epiphany presents; company canteens;
maternity/paternity leaves and reduced working hours.
SOCIAL INFORMATION
In keeping with the Company’s non-discrimination policy,
the benefits offered to part-time employees are the same
as those offered to full-time employees.
Supplementing the foregoing, the IBERDROLA Group also
maintains all applicable social benefits for its retirees,
such as study aids for children; assistance for family
members of disabled persons; Epiphany presents;
apartments and supplemental social security.
Particularly worth noting because it was so well received
by the entire workforce is the Shares for Everyone
[Acciones para todos] Plan, introduced in 2005 for
IBERDROLA Group employees, which allows all workers, if
they wish, to replace their variable compensation, within
the limits established by applicable regulations, with
Company shares. In 2007, and with respect to variable
compensation for fiscal year 2006, this offer was extended
to the employees of all affiliated companies in Spain
which are included within the IBERDROLA Group.
Supplemental social security plans
Eight of the companies covered by this report have
supplemental social security plans in place for their
employees.
In Spain, IBERDROLA, S.A., Iberdrola Generación, S.A. and
Iberdrola Distribución Eléctrica, S.A. are joint sponsors of
a pension plan, which employees can join voluntarily, in
which over 99% of the workforce participates. The
periodic contributions to be made under such system and
under the IBERDROLA Group’s Collective Bargaining
Agreement are calculated as a percentage of the annual
pensionable salary of each worker. The respective
companies finance these contributions for all their active
employees, except for those hired after January 1, 1996,
in which case 1/3 of the contribution is paid by the
company and 2/3 by the worker. IBERDROLA has no
outstanding financial commitment to such plan.
Furthermore, for active employees and those who retired
after 1996 covered by the IBERDROLA Group’s Collective
Bargaining Agreement, their risk benefits (widow,
permanent disability and death of active employee parent
benefits), which ensure a defined benefit upon occurrence
of the triggering event, have been instrumented through
an annual renewable insurance policy.
In Guatemala, there is a defined-contribution pension
plan which covers 100% of EEGSA and TRELEC employees.
On the bases used to establish plan contributions, the
companies pay 10.33% and workers 4% thereof.
In Brazil COELBA, COSERN and CELPE have pension
plans covering all their employees. The three companies
have a defined-contribution plan where contributions are
paid in equal parts by the companies and the workers.
At COELBA, there is also a defined-benefit plan where the
company’s contribution is 1.27 times the contribution of
the worker.
Collective bargaining
The companies that make up the IBERDROLA Group
respect employees’ rights to be represented by labor
unions or any other lawful representatives and to
participate with them in negotiations aimed at reaching
collective bargaining and other agreements on their
working conditions. In Spain, all employees except the
management team are covered by collective bargaining
agreements.
Collective bargaining agreements are negotiated between
Group companies and workers’ representatives. 93.31% of
the workforce of the companies that make up the
IBERDROLA Group is covered by collective bargaining
agreements.
In accordance with the commitment to social dialogue
assumed by both parties, labor unions represent
employees at the IBERDROLA Group in various aspects
relating to organization and management. The labor
union sections [secciones sindicales] that meet the
requirements established in collective bargaining
agreements assume the representation of all employees.
In December 2006, trade union elections were held at the
IBERDROLA Group, which were definitively closed with
the signing of the minutes of the meeting in late January
2007.
Charts 54-57 show the degree of union representation
following the last trade union elections at the companies
in Spain.
Particularly worth emphasizing is the good understanding
among companies, workers and trade union sections at all
Group companies, the most immediate consequence of
which is the existing favorable social climate.
As a result of the relationship models established at the
companies of the Group, although there is currently no
established minimum period for giving formal notice of
the organizational and operational changes that take
place at Group companies, it is the Company’s customary
practice to notify the affected interest group of any
significant event sufficiently in advance thereof to enable
145
them to act with the due guarantees, observing, if
appropriate, the statutory periods. This practice of
transparency in information also applies to the Labor
Union Sections that meet the requirements established in
the collective bargaining agreement to represent all
workers.
Occupational health and safety
Responsibility for risk prevention lies with the senior
managers of the various business units. The bodies
charged with coordination and monitoring are the
Prevention Coordination Committees, which work
closely with the IBERDROLA Group’s Joint Prevention
ServiceThe IBERDROLA Group has 36 local health and
CHART 54
safety committees assigned to work centers and
administrative units; there is also a Central Committee.
All Committees have been set up pursuant to the
Occupational Risk Prevention Law. These committees
are set up on an equal-representation basis, with the
same number of representatives of the Company and of
the workers.
In 2006, the health and safety committees met on a
quarterly basis and were the most important consultation,
participation and control body of the Prevention
Management System of the IBERDROLA Group, as well as
the forum where formal agreements on the matter are
reached with the trade unions.
CHART 55
(%)
2006 Trade union representation,
Iberdrola Ingeniería y Construcción, S.A.
UGT: 28.5%
(%)
2006 Trade union representation. Iberdrola Group
ATYPE-CC: 31%
SIE: 21.0%
UGT: 23%
ATYPE-CC: 15.7%
CCOO: 9.7%
USO: 23%
CGT: 8.9%
ELA: 8.6%
USO: 7.1%
Other: 0.5%
CCOO: 23%
CHART 56
CHART 57
2006 Trade union representation,
Iberdrola Operación y Mantenimiento, S.A.
2006 Trade Union Representation
Iberdrola Energías Renovables, S.A.
(%)
(%)
CCOO: 57%
UGT: 22%
ATYPE-CC: 35%
CCOO: 30%
ELA: 17%
UGT: 35%
SIE: 4%
• UGT: Unión General de Trabajadores • SIE: Sindicato Independiente de la Energía • CCOO: Comisiones Obreras • CGT: Confederación General de Trabajadores.
• ELA: Euskal Langileen Alkartasuna • USO: Unión Sindical Obrera • ATYPE-CC: Asociación de Técnicos y Profesionales de la Energía-• Colectivo de Cuadros.
146
SOCIAL INFORMATION
At the IBERDROLA Group, one hundred percent of the
workers are represented by occupational health and safety
committees. Affiliated companies in Spain have health
and safety committees covering 73.09% of their
workforce. At affiliated companies in Latin America,
existing occupational health and safety committees
provide coverage to 58.61% of the workforce. For
companies overall, such percentage stands at 86.81% of
the workforce, higher than in 2005 (see chart 58).
CHART 58
Employees represented on health and safety committees
(no.)
Most companies within the IBERDROLA Group include
specific sections in their Collective Bargaining Agreements
describing the operation of their Occupational Risk
Prevention bodies. The IBERDROLA Group Collective
Bargaining Agreement sets forth the duties and
responsibilities of the prevention service, prevention
representatives and mixed health and safety committees.
The principal ratios relating to accident rate and
absenteeism monitoring at companies may be found in
the “Supplemental Information” Annex. The formulas
used to calculate them are those established in the
Technical Protocols of the Global Reporting Initiative
Guidelines www.globalreporting.org.
Charts 59-60 show the changes in the frequency rate at
affiliated companies and the accident frequency rate.
11,281
CHART 59
+4.88%
Frequency rate
10,756
350
•
300
•
•
250
*
200
2005
2006
*
*
150
100
2004
• Affiliates
•
•
*
*
*
2005
*
*
Spain Aff
2006
Iberdrola Group
Latin America
CHART 60
Accident frequency rate*
13
11
9
7
Annual
rate
Índice anual
200
0
200
1
200
2
200
3
200
4
200
5
200
6
199
8
199
9
5
199
6
199
7
The IBERDROLA Group monitors its own and outsourced
work for preventive purposes. However, it has no full
statistical information on accident rates in outsourced
work, since it contracts for turnkey services and,
accordingly, accident rates at the companies providing
such services are not recorded. In any event, the
contracting process at Group companies require that all
companies contracting for work comply strictly with
Occupational Risk Prevention regulations. Such
requirement is included in the “Basic conditions for
contracting for works and services”, available on
IBERDROLA’s website www.iberdrola.es.
0
•
•
50
199
1
199
2
199
3
199
4
199
5
The IBERDROLA Group has an “Occupational Accident,
Illness and Incident Investigation and Recording
Management” procedure. Occupational illnesses, accidents
at work and incidents are reported to the prevention
service, the labor authority and worker representatives.
Safety and Health Committee meetings monitor accident
rates and review accidents and their causes. The accident
reporting process is described in one of the procedures of
the Occupational Risk Prevention Management System,
which is audited regularly.
Trend
Línea de tendencia
rate = Number
of accidents
withcon
sickbaja
leave
million
hours
(*) Frequency
índice de frecuencia
= Número
de accidentes
porper
millón
de horas
worked
trabajadas.
147
Occupational health education and prevention
The Company’s medical services, which are part of the
Prevention Service, are responsible for monitoring the
health of employees by means of regular medical
check-ups and preventive treatment of diseases. Most
Group companies, as part of their preventive strategy to
manage the health and safety of their workers, offer
assistance programs both to their professionals and to
the families of employees, laying particular stress on
infectious or very serious illnesses. These programs
focus on training, support and risk monitoring. Medical
assistance is provided through the medical insurance
offered by the company to its workers and their
families, as mentioned above. In addition, the principal
work centers have medical services, where employees
receive medical care during working hours.
In 2006, 6,116 check-ups were performed at the IBERDROLA
Group. There were check-ups for 645 employees at affiliated
companies in Spain and for 2,219 employees at affiliated
companies in Latin America. Within the IBERDROLA Group,
only 1.79% of the check-ups performed indicated some
limitation for work, and the necessary measures were taken
to resolve such limitations for the performance of
employees’ current duties. Out of the total workforce of the
IBERDROLA Group, 1.24% of employees had limitations for
their current jobs.
As part of the preventive strategy to manage personnel
health and safety, particularly relevant are the education,
advice, prevention, risk monitoring and treatment programs
that apply to workers to prevent dangerous and/or
communicable illnesses.
Worth noting in this regard are the assistance and education
programs given at affiliated companies in Brazil to prevent
AIDS or other potentially dangerous illnesses.
At the IBERDROLA Group and at most affiliated companies
in Spain, support and advice is given to family members of
employees at their request through the Company’s Medical
Services, providing economic assistance to spouses and
children where required, as already mentioned in the Social
Benefits section. This benefit also extents to retired
employees of the IBERDROLA Group.
Education, training and risk monitoring programs were
carried out at the IBERDROLA Group, as well as programs
for the treatment of illnesses common in the country, such
as atherosclerosis, prostate cancer, diabetes, hypertension
and smoking. 5,949 hypertension, 2,246 prostate cancer and
6,292 diabetes tests were performed in 2006.
148
Training
IBERDROLA invests in the development and training of its
professionals, both in Spain and in the Latin American
companies in which it is present, through specific
technical and management programs
Three Reception and Integration Programs were held in
2006, attended by employees of the IBERDROLA Group
and Iberdrola Energías Renovables. Reception plans help
newly-hired employees, through face-to-face meetings and
visits to some of the main Company facilities, to acquire
an overall picture and understand the activities at each of
the businesses that make up the IBERDROLA Group,
strengthening their relationships with other persons
within the Company.
Training reached 88.76% of employees,
exceeding 660,000 hours, of which almost
200,000 were given in Latin America
The scope of training at Group companies, measured as
the percentage of the average workforce that attended at
least one training session in 2006, was 88.76%,
representing a 16.5% increase from 2004 and up 3.98%
from 2005.
The total number of training hours was 660,470 in 2006,
equivalent to an average of 50.83 training hours per
employee, and the growing trend of previous years
continues.
CHART 61
Training hours
(no.)
+9.3%
660,470
604,168
2005
2006
SOCIAL INFORMATION
In 2006, 80.63% of the employees of Group companies
participated in the variable compensation program
through an individual performance-based evaluation
process. At the parent company, 100% of the professionals
have been evaluated.
CHART 62
Attendees at training courses
(no.)
54,238
+13.7%
47,698
2005
2006
Charts 61-62 show the hours of training and attendees at
training courses.
In 2006, most IBERDROLA companies continued with the
Programa Desarroll@, aimed at managers and technicians,
to enhance their capacity for improvement, stimulate
their development and strengthen the values, attitudes
and behavior that are part of the IBERDROLA culture.
Specific training campaigns were launched throughout
2006 for managers and young people with management
potential, and the Executive MBA in Electric Utility
Company Management remained in place.
All these programs are aimed at enhancing motivation,
creating a climate of on-going learning, increasing the
employability of all workers and improving the company’s
profitability and competitiveness, job stability and
sustained social development, optimizing all available
resources.
At the IBERDROLA Group, no salary differences are
established on the basis of sex when hiring personnel.
There are no differences in the base salaries of men and
women at the parent company. At affiliated companies,
there are differences in hiring salaries owing to the fact
that persons with different profiles and experience are
hired in each professional category; the greatest
differences in the last three years ranged between 105%
and 79% in the initial salary of women compared with
that of men.
The base salaries paid by companies to their workers are
closely watched by certain social organizations. The
IBERDROLA Group has a commitment to its workers to
compensate them fairly and reasonably, both at its
companies in Spain and in Latin America. This statement
is supported by actual practice at such companies.
Accordingly, an analysis of the base salary offered by the
companies within the Group shows that it is practically
double the minimum statutory salary in each of the
countries where such companies are located.
Hiring and human rights
The principles contained in the IBERDROLA Group’s
Recruitment and Screening policy (available at
www.iberdrola.com), inspired by the Code of Professional
Conduct, provide for:
• Non-discrimination and equal opportunity.
• Universal recruitment.
In recent years, COELBA (Brazil) has been offering training
programs for its employees to prepare for the transition to
retirement.
Evaluation, compensation and equality of opportunity
The purpose of companies’ compensation models is to
remunerate workers on the basis of their level of
responsibility and individual performance, rewarding
effort, commitment, experience and responsibility. These
models set compensation according to category-based
standards and to the objectives and performance
evaluation processes.
• Selection based upon candidates’ merits and
qualifications.
These principles ensure that the screening and
recruitment process is rigorous and based exclusively
upon the candidates’ academic, personal and professional
merits, because objective tests are used and methods
based strictly on professional criteria are applied.
Therefore, no one is denied the possibility of pursuing a
professional career, either in the external selection
processes or within the Company, as is evident from both
in-house and external job vacancy announcements, since
there has been no complaint from employees, union
representatives or persons outside the company.
149
With this basic policy, the companies believe that the risk
of their activities being affected by instances of violation
of human rights is practically non-existent.
None of the companies within the Group has had any
incidents in connection with freedom of association or
collective bargaining. Likewise, none of such companies
has been involved in incidents relating to child or forced
labor, or with the violation of the rights of indigenous
people.
In 2006 there was only once incident at the IBERDROLA
Group claiming discrimination. It was commenced
externally, by means of a court complaint. Following a
review of the situation, the company answered the
complaint and entered an appearance in the action and,
following a trial court judgment in favor of the
IBERDROLA Group, the legal proceeding is still
continuing.
Internal communications in Spain
At IBERDROLA, communication is seen as a global activity
requiring complete coordination among all members of
the organization, and communicating different messages
to external and internal audiences is unwise. Employees
are shareholders and customers, and all of them are
spokespersons within their environment.
The purpose of in-house communication at IBERDROLA is
to transmit clear and effective messages to personnel to
keep it informed of future challenges and securing its
commitment to the management plan. Within the
changing environment in which we act, in-house
communication becomes crucial, guided by the universal
fact that people need to know what is happening around
them to feel motivated.
Enhancement of communication between employees, the
Company’s management decision-making bodies and its
Chairman & CEO is a permanent goal of the company and
is achieved through the following actions:
• Meeting of the Chairman & CEO with employees. In
2006, Ignacio Galán met with employees in Bilbao.
Such meeting could be viewed live by the rest of the
workforce through the Employee Portal.
• Breakfasts of the Chairman & CEO with
professionals from different areas of the
organization.
150
• Video messages from the Chairman & CEO to
employees. Whenever the occasion requires it, Ignacio
Galán addresses employees through videos received by
e-mail and which are available on the Employee Portal.
• Sharing [Comparte] Initiative. This is a program that
is already a classic at the Company which, through
cascading meetings, reaches the entire workforce,
informing it of achievements and the challenges still
confronting the organization.
• Meetings of different business areas. In order to
tailor messages to the interests of the various groups
making up IBERDROLA, meetings are held for the
different business areas, where the members of each
area hear first-hand about the issues affecting them
most in their daily work.
In-house communication tools and activities take
advantage of available technology to reach, simply and
quickly, a workforce that is geographically disperse and
with different work shifts.
Institutional in-house communication tools include the
following:
• Internal Energy [Energía Interna]. A bi-monthly
in-house magazine that is a relevant means of
information, supplementing other more immediate
instruments that already exist at IBERDROLA.
• Employee Portal [Portal del Empleado]. All employees
can access the Employee Portal. The Portal is a
powerful tool that promotes internal communications,
strengthens the corporate identity and facilitates work.
• Ibernoticias Digital. A monthly digital newspaper
with information on Mexico, Guatemala, Brazil, Bolivia
and Chile. It is available in Portuguese and Spanish
and may be accessed directly from Ibernoticias Digital
de España.
• Ibernoticias Digital Latinoamérica. A monthly digital
newspaper with information on Mexico, Guatemala,
Brazil, Bolivia and Chile. It is available in Portuguese
and Spanish and may be accessed directly from
Ibernoticias Digital de España.
• Electronic newsletters. Newsletters on specific subject
to raise employee awareness of specific issues when so
required.
SOCIAL INFORMATION
• Communication for managers. Making the most of
new technologies, two specific channels have been set
up for communication with managers: the
Communication Channel (two brief daily summaries
on general, economic and industry news) and SMS
messages sent to their corporate mobile phones.
• Employee Suggestion Box The Employee Suggestion
Box [Buzón del Empleado] is the fruit of IBERDROLA’s
efforts to use all available information to serve the
needs of its members. Employees send suggestions,
comments, complaints or requests for information.
• Banners, posters, brochures, bulletin boards… They are
used to post items and remind employees of them.
When required, informational brochures on specific
matters are prepared to inform employees about
relevant aspects of the Company.
• Letters from the Chairman & CEO. Personalized
communications sent to employees on special
occasions such as birthdays, new babies or weddings.
• Christmas card competition. The children of
employees make the card that is used as the
IBERDROLA Group’s Christmas card.
Internal Communications in Latin America
México-Guatemala
In Mexico, employees have Ibernoticias Digital
Latinoamérica, a digital newspaper that is a sibling of the
one at the Spanish Company, that informs them of the
most relevant events and news of the Company. To ensure
that this information reaches all employees, including
those who don’t have a computer, Ibernoticias
Latinoamérica is printed and posted on the bulletin
boards of the facilities.
In addition, at IBERDROLA Mexico, monthly and/or
bi-monthly informational meetings are held with
employees of the various divisions. Company employees
in Mexico also participate in the Share [Comparte]
Initiative, described above.
In Guatemala, EEGSA and TRELEC have the Lights [Luces]
in-house magazine. There is also a “Corporate
Communication” e-mailbox which is the main internal
communication channel, since important information of
interest for all employees is disseminated through it. This
e-mail is supplemented by bulletin boards [“boletineras”]
posting a portion of the material sent by e-mail.
In addition, the following in-house communication
campaigns were carried out in 2006: Working Climate,
Magic and Mystery 2 (promoting the second cultural
project sponsored by EEGSA), Eletriboliche (Bowling
Championship), Vaccination and Code of Ethics.
Company employees in Guatemala also received four
different issues of the “Segurito” Newsletter on special
safety issues and fliers with particularly relevant
information.
South America
The Group’s subsidiaries in Brazil have various in-house
communication tools to keep their employees informed.
Thus, the following exist at COSERN: the COSERN Energy
[Energía] magazine, published monthly; COSERN Informs
[COSERN Informa]-specific information on the company’s
day-to-day affairs sent by e-mail; letters from the
Chairman; Electric Current [Corrente Elétrica] -a local
corporate e-mail channel for holding and associated
companies; the Intranet; “Clarao”, with information
regarding the salary negotiation processes; “Energía Já”,
a quick newsletter for information requiring immediate
dissemination; the Understanding our Business
[Entendiendo Nuestro Negocio] newsletter; Open Circuit
[Circuito Abierto], bulletin boards with corporate
information; and Neoenergia Total, information on social
responsibility and environmental corporate action
programs.
At COELBA there is the COELBA Energy [Energía COELBA]
magazine; the Coelba Informs [Coelba Informa]
informational e-mail; the Internal Circuit [Circuito Interno]
bulletin-board newspaper; interactive/open circuit space;
and Click, information on collective bargaining.
CELPE also has internal communication agents that
ensure that communications flow through all members of
the organization and among other tools, has the CELPE
Energy [Energía CELPE] in-house magazine and the CELPE
Informs [CELPE Informa] informational e-mail.
At IBENER and ESSAL, affiliated companies in Chile,
regular meetings are held to ensure the flow of
information among employees. The intranet, e-mail and
memoranda are often used as well.
Internal communications in Bolivia take place through
meetings with managers, bulletin boards, e-mail and
internal memoranda.
151
SHAREHOLDERS AND FINANCIAL COMMUNITY
Introduction
Policy and objectives
IBERDROLA’s policy with respect to its shareholders
and the financial community is based on on-going
service and on the transparency, accuracy and reliability
of the information supplied. Its primary goal is to build
a long-term direct and personal relationship with its
shareholders and the financial community, based on
effectiveness, trust, closeness and permanent
availability.
Responsibility within the organization
Service to shareholders and the financial community is the
responsibility of the Economic and Financial Division, of
which the Investor Relations Division is a part, and has the
permanent support of the Company’s Chairman & CEO.
The directors of the various business divisions also provide
support on issues that require it.
Operation
The IBERDROLA Group provides service and an effective
response to all those who have deposited their trust in its
stock through:
IBERDROLA’s website has been chosen as the
Best On-Line Investor Relations Service
Corporate website
The investor section of the website received the
distinction in 2006 of the Expansión Favorites for the
Best On-Line Investor Relations Service award. At such
website, investors find sections on: corporate
governance, the annual report, investor presentations
and agenda, financial and CNMV [National Securities
Market Commission] information, capital and fixed
income, sustainability, analysts’ opinions, dividend
reinvestment and the strategic plan. Sections dealing
with the IBERDROLA’s transaction with ScottishPower
and the Strategic Plan were added in 2006.
Telephone Support Service
The Office of the Shareholder has a toll-free line
(900 100 019) which answered almost 13,000 inquiries in
2006, 57% of them relating to IBERDROLA’s listing price.
The breakdown of calls is shown in chart 63.
In addition, IBERDROLA has a Procedure of the office of
the shareholder for answering questions, complaints and
claims, pursuant to which it provides comprehensive
service in all aspects of its relationship with shareholders.
• The Office of the Shareholder [Oficina del Accionista]
• The Investor Relations Office [Oficina de Relaciones con
Inversores]
Office of the shareholder
The Office of the Shareholder has effective communication
channels with the close to 22,000 shareholders recorded in
its database: quarterly, the Shareholders’ Information
Bulletin [Boletín de Información para Accionistas] and daily,
through the corporate website and the toll-free line at
900 100 019. A service has also been put in place for
minority shareholders.
CHART 63
Breakdown of calls to the IBERDROLA shareholder
assistance line (2006)
(%)
Stock market performance: 57%
General Shareholders’ Meeting: 17%
Other: 15%
Dividends: 7%
Shareholders’ Quarterly Information Bulletin
The Bulletin includes the financial, stock market and
operating highlights of the quarter. In addition, the office of
the shareholder periodically evaluates shareholder
satisfaction levels through bi-annual surveys. Following the
2005 survey, several improvements suggested by
shareholders were set in motion in 2006 relating to an
increase in the number of telephone operators on the days
leading up to the General Shareholders’ Meeting and the
reduction in the delivery periods of the required documents
and information.
152
Earnings and significant events: 3%
ScottishPower: 1%
Document delivery service
Shareholders as well as other persons and institutions that
so request are sent the documentation they need in
connection with the Company. If they want to receive
regular information, they are included in a database for
such purpose.
SOCIAL INFORMATION
Service to minority shareholders
The purpose of this service is to build even closer
relationships with minority shareholders. IBERDROLA
carried out several activities during the fiscal year, among
which particularly worth noting are the presentation of the
2007-2009 Strategic Plan in Madrid, Bilbao, Valencia and
Málaga before about 140 attendees, and the organization of
various events prior to the General Shareholders’ Meeting.
General Shareholders’ Meeting
The Office of the Shareholder provides support on all issues
relating to the organization of and attendance at the General
Shareholders’ Meeting, upholding the shareholders’ right to
information, provided for in Article 14 of the By-Laws.
The notice of the General Shareholders’ Meeting, the
agenda and the matters to be dealt with at the meeting,
as well as the related prior documentation are available
on the corporate website.
In the days leading up to the Meeting, a complimentary
document delivery service is made available to shareholders.
45,238 shareholders attended the Meeting in 2006, of
whom 591 attended in person, 11 were included because
they had cast their vote from a distance and 44,636 were
represented by proxy, for a total of 499,604,738 shares
representing 55.42% of the Company’s share capital.
The changes in such percentage are shown in chart 64.
Investor relations office
The investor relations office deals with the daily inquiries
from fixed income, equity and socially responsible
investment analysts and investors on an individual basis.
It provides information on an on-going basis, publishes it
on the corporate website and regularly sends it to the
investors and analysts recorded in its database.
IBERDROLA has made presentations to more
than 600 institutional investors in Europe and
the United States
The level of activity in the principal financial markets
of the world remained high in 2006. Especially
noteworthy in communications with investors and
analysts is IBERDROLA’s quarterly earnings release,
which may be freely accessed IBERDROLA’s website,
www.iberdrola.com, They are transmitted in the format
of a real-time bilingual video conference, with the
opportunity to ask questions live. These occur in
Madrid and London, with the presence of more than
100 analysts and investors.
Other extraordinary presentations were also made in
2006:
• Renewable energy workshop in Toledo, with
approximately 100 attendees.
CHART 64
Percentage of share capital represented at the General
Shareholders’ Meeting
(%)
55.42%
+5.96%
52.3%
2005
2006
The shareholders’ toll-free line answered about 2,200 calls
relating to the General Shareholders’ Meeting, 17% of the
total calls received in 2006.
During the General Shareholders’ Meeting, the Office of
the Shareholder gives shareholders the opportunity to ask
questions of or make suggestions to the members of the
Board of Directors, and shareholders who are unable to
attend the Meeting and wish to ask a question may also
send in their request.
• Presentation of the 2007-2009 Strategic Plan in
Madrid, with approximately 90 attendees.
• Presentation of the IBERDROLA- ScottishPower
combination agreement in Madrid, at which more
than 400 analysts and investors were connected to the
broadcast both through the IBERDROLA website and
by telephone.
In its communications with the financial community, the
shareholders and investors information section of
IBERDROLA’s website also plays an important role. In
2006, it received more than 51,260 visitors, who browsed
through almost 230,675 pages, and downloaded a total
of 3,801 documents.
Communications abroad took the form of road shows and
one-on-one meetings with more than 600 institutional
investors in Europe and the United States.
IBERDROLA also organizes periodic meetings with
analysts and investors at its offices in Madrid. Meetings
with over 330 interested parties were held in 2006.
153
In addition, visits to Company generation facilities and the
America’s Cup facilities were organized in 2006.
The intensive activities of the Investor Relations Division
were accompanied this year by strong performance of the
shares on the Stock Exchange. IBERDROLA’s shares ended
the year at 33.12 euros, with a yield of 43.4%.
Information provided to analysts and investors
The central axis of the documents provided to analysts
and investors is the Quarterly Earnings Release and the
Quarterly Earnings Brochure. Before each presentation,
IBERDROLA sends out the Analysts and Investors
Quarterly Bulletin, IBE-WATCH.
65 communications were also sent to analysts and
investors in 2006 relating to relevant information about
the Company.
IBERDROLA has been recognized as the
best European electric utility in investor
relations
Regarding information provided to official entities,
IBERDROLA reported a total of 100 significant events
and other notices to the National Securities Market
Commission (CNMV) during 2006, which are shown
in table 63.
The information provided to analysts and investors is
based on economic aspects, although particular attention
is also paid to communication of the most salient strategic
aspects, and sections on social and environmental issues
are also included.
TABLE 63
Significant events and other notices to the CNMV
(2006)
No.
Strategic investment and divestment
transactions
Earnings information
Changes in the Board of Directors and
relevant Corporate Governance information
Presentations about the Company
Information on strategy, objectives
and strategic agreements
Other notices regarding significant events
Total
154
28
14
4
14
10
30
100
The investor relations office also provides personalized
attention to equity, fixed-income and socially responsible
investors and analysts.
Equity investors and analysts
IBERDROLA has a database of over 50 equity analysts and
close to 950 equity investors, which is updated on a daily
basis.
Six Road Shows were held in 2006, one following each
quarterly earnings release, and two specific ones to
present the 2007-2009 Strategic Plan and the
ScottishPower transaction. The road shows took place in
the United States, the United Kingdom, Scotland, France,
Germany, Italy, Switzerland, Sweden, The Netherlands,
Denmark, Belgium and Spain.
IBERDROLA has made presentations at a number of
international industry forums, followed by one-on-one
meetings, such as the Edison Forum in Las Vegas, USA and
the Edison Forum in London. The Company has also made
presentations at seven other industry conferences
organized by a number of investment banks in Paris and
London.
Fixed-income analysts and investors
IBERDROLA has a fixed-income database with
approximately 20 fixed-income analysts and
300 fixed-income investors, which is updated regularly.
Periodic meetings continued with the agencies that rate
IBERDROLA: Moody’s, Standard & Poor’s and Fitch.
Socially responsible analysts and investors (SRI)
IBERDROLA maintains on-going contact with the principal
socially responsible investment analysis entities, and has
about 70 contacts in its database.
IBERDROLA also attended various SRI conferences and
forums, such as Faire, Annual Forum for European
Responsible Investment and the Eureka SRI Investment Club
in Paris. An SRI road show was also held in Paris. In
addition, IBERDROLA is in contact with and responds to
requests from the socially responsible investing areas of
leading investment banks.
SOCIAL INFORMATION
As a result of this intensive work, IBERDROLA has
continued to increase its weighting on the main indices,
which can be viewed on the corporate website, in the
section on sustainability indices.
Perception analysis
IBERDROLA’s Investor Relations Office performs
continuous monitoring of the perception that the
principal analysts have of IBERDROLA and its European
competitors.
The perceptions of the main analysts as of December
2006 are summarized in table 64:
TABLE 64
IBERDROLA
Recommendations
Buy/Overweigh
Hold/Neutral
Underweigh
Sell
% (2006)
of total
27%
55%
18%
0%
This perception analysis is reflected in several periodic
reports and other specific perception reports that enable
the Company to take appropriate improvement actions.
Recognition
The Company’s intensive work in its relations with
analysts and investors has earned it the recognition of the
financial community. According to the survey conducted
by the Institutional Investor Research Group (IIRG) for the
European Investor Relations Study, IBERDROLA is the best
European electricity company in investor relations, its
Chairman & CEO has been chosen, for the fourth straight
year, as the best CEO among European utilities and
analysts have singled the Company out for its leadership
in two other categories: best Financial Director
(Mr. José Sainz Armada) and best Investor Relations
Manager (Mr. Ignacio Cuenca).
REGULATORY AUTHORITIES AND PUBLIC
ADMINISTRATIONS
Objectives
Because they are services of general economic interest,
the IBERDROLA Group’s core activities are subject to
widespread regulation. Hence, regulatory entities and
public administrations are relevant interest groups of
the Company.
In its relationship with regulatory authorities,
IBERDROLA follows the regulatory principles described
below:
The Market
A competitive market is the best way to maximize social
well-being. Accordingly, energy regulation must promote
deregulation and foster free competition among the
various players wherever technically possible. This will
allow end-customers to choose the offer that best serves
their interests in terms of price and service.
Sustainable development
The ultimate purpose of energy regulation must be
sustainable development based on a balance of economic,
social and environmental aspects.
IBERDROLA defends the principles of free
competition, transparency, efficiency and
regulatory vision
Transparency
All regulations must be prepared and applied
transparently with the participation of all players involved.
To that end, administrations with jurisdiction in this
matter as well as interested players must make their
proposals and comments public.
Efficiency
Efficiency is the optimal allocation of the scarce resources
available, in accordance with objective conditions of
demand, price and technology. In deregulated activities,
the market is the vehicle that best provides efficiency. In
regulated activities, regulation must allow for the recovery
of prudently incurred costs, promote cost curtailment and
155
quality enhancement and allow consumers to benefit
from efficiency gains, either through better services and
prices in competitive activities or through specific
regulatory mechanisms allowing them to share cost
reductions in regulated activities with companies.
Single European Community market
The ultimate goal must be to achieve a single European
Community market. Physical and regulatory barriers
which hamper the formation of this single market will
have to be removed.
Long-term vision
The energy industry requires sizeable investments with
long depreciation periods. For this reason, the regulatory
framework should be stable, predictable and forwardlooking, avoiding interventionist practices which seek to
resolve transitory issues.
IBERDROLA has an organizational structure aimed at
maintaining on-going dialogue with these entities. It also
has procedures to deliver the information required and to
internally coordinate the visits and meetings usually held
with them.
Corporate policy
IBERDROLA’s relationship with regulatory entities is
established along two different tracks.
On the one hand, there are relationships geared to the
enactment of efficient regulatory provisions allowing for
the development of a competitive market. To that end,
there is an on-going and constructive dialogue where
information, knowledge and opinions are exchanged,
which allows IBERDROLA to become acquainted with the
concerns and proposals of regulatory entities and to put
forward the Company’s own opinions and points of view
in the legitimate defense of its interests and those of its
shareholders and customers.
In accordance with the regulatory principles mentioned
above, IBERDROLA defends, among other things, the
adequacy of tariffs for regulated activities, the elimination
of comprehensive tariffs, the assumption of all costs
internally, including environmental costs, the intervention
of the government only in cases of anticompetitive
practices and the promotion of renewable energy and
energy efficiency.
A second type of relationship is geared to providing all
information required by regulatory entities, whether it be
in connection with the normal conduct of its business or
as a result of any transitory issue.
156
In addition to its direct relationships with regulatory
entities, IBERDROLA also participates in the regulatory
process through domestic company associations such as
UNESA (electricity) and SEDIGAS (gas), or international
associations such as EURELECTRIC, the Regional Energy
Integration Commission [Comisión de Integración
Energética Regional] (CIER) and the World Energy Council
(WEC).
Organizational structure
IBERDROLA has an organizational structure that allows it
to carry out activities relating to regulatory entities.
From a geographical standpoint, it is structured in such a
way as to respond to requests from and maintain relations
with the various existing regulatory authorities. Thus, it
has a permanent office in Brussels responsible for
relations with EC institutions, reporting to the Director of
Operations, and a Regulation Division in Spain for
domestic issues. Relations with autonomous community
and local entities take place through an institutional
presence therein.
IBERDROLA has an organizational structure
capable of meeting the demands of domestic
and international regulatory entities
IBERDROLA’s relationships with the regulatory entities
of the Latin American countries where it has a presence
take place within those same countries, where there is
greater in-depth knowledge of the regulations and
actual reality of the country. The practical manner in
which these relationships develop varies from one
country to another, depending, for instance, on the
degree of deregulation, the number of existing
regulatory entities and the powers and duties of each
of them, as well as on the activity (generation or
distribution) in which IBERDROLA engages in each
country. In general, there is usually a specialized unit
responsible for regulation and relations with regulatory
authorities. There was no significant regulatory
problem in 2006.
From a functional point of view, it is structured on a
matrix basis, with experts in regulatory matters at the
corporate level who have a general vision of the Group
and others specializing in the individual activities of
each of its business divisions, who work in a
coordinated manner.
SOCIAL INFORMATION
Anti-corruption policy and practices
In defense of an ethically responsible corporate action,
IBERDROLA opposes practices related to corruption in any
of its form.
From the external point of view, IBERDROLA’s actions
follow the guidelines described below:
• Employees of the IBERDROLA Group must comply
with the Code of Professional Conduct and the Ten
Guidelines for Responsible Behavior, which provide
that this type of practice must not be used to obtain
personal benefits or advantageous treatment for the
company.
• To put this policy into practice, IBERDROLA’s Risk
management system considers bribery and corruption
as potential business risks.
• Together with the preventive approaches of the
business divisions with respect to this issue, specific
analyses where conducted in fiscal year 2006 of the
human rights and corruption situation in three
company activities where such issues are relevant, with
recommendations to the managers thereof to
strengthen responsible behavior in this area.
To strengthen such policy, during 2006, none of the
Group’s companies made any financial contribution to
political parties or to organizations reporting to them.
From the internal viewpoint, IBERDROLA has stringent
procedures to prevent various forms of corruption in the
Company’s activities:
• In the general administrative division, through
processes aimed, among other things, at eradicating
fraud.
• In the purchasing area, through bidding and award
procedures designed to prevent irresponsible behavior
by the users thereof.
Group companies are conducting activities to train
employees in this issue. In 2006, a total of 328 employees
received corruption-prevention training at companies within
the Group, of which 37 were management personnel.
Regulatory aspects of interest
IBERDROLA declares itself to be a company that is
respectful of applicable legislation and carries out all its
activities in accordance therewith. Because of its firm
belief in the need to move forward in the deregulation
of the industry, it opposes any anticompetitive practice
or any practice involving abuse of market power.
As a company engaging in an activity that is subject to
the supervision and control of various regulatory
entities, IBERDROLA may be subject to various
proceedings commenced by the regulatory or
competition authorities on their own initiative or as a
result of reports from interested third parties. In all
such proceedings, IBERDROLA follows a principle of full
cooperation in providing the requested information, in
the firm belief that our actions comply with the law at
all times.
There were no regulatory situations of significant interest
at the companies covered by this report In Latin America
in 2006. The most significant issues relating to regulation
in Spain are discussed below:
Prices on the wholesale market
In 2004, the Competition Court [Tribunal de Defensa de la
Competencia] (TDC) imposed a penalty on IBERDROLA for
abuse of dominant position in the electricity market in
2001. Such penalty was cancelled in 2006 by the National
Criminal and Administrative Court [Audiencia Nacional],
which upheld the administrative appeal filed by
IBERDROLA
Another proceeding (no. 601/05), is pending resolution
before the Competition Court, for very similar reasons
also relating to the management of technical restrictions
in the market and which affect the Company’s actions on
two days (May 18 and November 13, 2003). The period
under investigation is between December 18, 2002 and
December 31, 2003.
Petition filed against generation facilities
The High Court of Appeals of Madrid dismissed the
petitions filed by an ecological association against the
licenses for IBERDROLA’s combined-cycle plants at Arcos
and Aceca.
In 2006, five persons were reprimanded or dismissed at such
companies for improper practices in this regard, and there is
no record of any agreement entered into by the IBERDROLA
Group that has been cancelled for this reason.
157
Penalties
In fiscal year 2006 various types of complaints and
infringement proceedings were brought against the
Group’s companies in connection with quality of service,
regulation and other administrative issues in Spain,
Bolivia, Chile and Brazil.
Some of these proceedings, those considered to be
significant, have resulted in financial penalties which, in
2006, have entailed payment, in consolidated terms for
the Group, of 1,276,418 euros, of which 1,053,382 euros
were paid in Spain, 123,591 euros in Bolivia, 4,440 euros
in Chile and 95,005 euros in Brazil.
The above-mentioned figure includes the incidents and
claims relating to the sale of products and services
described in the “Customers” section of this report.
CUSTOMERS
IBERDROLA in the markets
IBERDROLA’s general policy with respect to its markets
is to meet customers’ energy needs, providing electricity
and gas supply and the required additional
supplemental services for their homes, companies and
institutions. It therefore undertakes to take all actions
needed to provide the required energy to a growing
number of customers, with ever-improving levels of
quality in supply and service.
IBERDROLA has specific policies in place regarding the
Company’s relations with its customers that focus on
protecting consumers’ rights and interests in areas such
as the safe use of energy, accurate information on the
products and services offered and ensuring the
protection and privacy of personal data.
The information in this chapter refers to the
subsidiaries and affiliates of the IBERDROLA Group
covered by this report which, as of the end of the fiscal
year, had 156,000 gas customers, 167,000 water
customers and 18.4 million managed points of supply
to serve their electricity customers.
The Group’s real estate activities, while relevant from the
standpoint of social awareness, is minor and has a low
impact on IBERDROLA as a whole. Such activity is, in any
event, subject to the same policies as all other activities as
regards relations and commercial practices with
customers.
158
Relations with customers paying regulated rates in Spain
are managed by the Regulated Business Division.
Relations with electricity and gas customers in the
deregulated Spanish market are managed by the
Deregulated Business Division, which also manages
other products and solutions sold on this market.
The other subsidiaries and affiliated companies in Spain
and Latin America have their own commercial
management structures with their customers.
IBERDROLA products and services in Spain
The main products that IBERDROLA makes available to its
customers are electricity and natural gas. Also included in
the Company’s offer is a wide range of products, services
and solutions, both for households and for companies, in
line with the Company’s commitment to the environment
and sustainable development.
SOCIAL INFORMATION
Worth noting among household products and solutions are:
• Potable water distribution and waste water collection
and treatment at ESSAL (Chile).
• Heating and air conditioning services.
• Maintenance of air conditioning installations.
• Maintenance of natural gas installations.
Among products and solutions aimed at companies, the
following deserve mention:
• Turnkey electricity facilities.
• Energy efficiency (energy audits, condenser batteries,
flow regulators).
• Technical quality of supply.
• Environmental management (advice, removal of
PCB-type insulation).
• Renewable Energy Facilities (solar photovoltaic energy,
solar thermal energy for sanitary hot water).
Special mention should be made of the solutions being
put in place at customers’ facilities to enhance the quality
of their electricity supply, resulting in the best possible
operation of their production processes. Along these lines,
worth noting are uninterrupted supply systems, systems
for the elimination of short electric disturbances, voltage
dip compensators, the installation of harmonic filters, etc.
Other IBERDROLA Group products and services
Affiliated companies in Spain offer the following products
and services:
• Engineering and construction of generation,
distribution and control facilities, both in Spain and in
other countries.
• Operation and maintenance electric generation
facilities.
• Sale and rental of housing, offices and business
premises.
Affiliated companies in Latin America, for their part,
offer:
• Electric power in the various stages of production,
transmission and distribution at companies in Mexico,
Brazil, Bolivia, Guatemala and Chile.
Customer health and safety
With a view to providing the greatest possible measure of
safety for customers, IBERDROLA promotes compliance
with regulations relating to the development and sale of
the products and services it provides across the
organization.
It also adopts a number of measures than enhance
product safety for the end user. Worth noting in 2006
were:
• The printing and distribution to customers, in
cooperation with the Community of Madrid, of two
and a half million copies of the diptych entitled
“Take care of your electric installation”, with advice and
preventive measures on the proper use of home
electric installations.
• The expansion in the scope of the maintenance service
for natural gas installations, which now includes
corrective actions together with the checking of
appliances.
• The requirement that vendors and suppliers comply
with current health and safety regulations throughout
the manufacturing and sale process.
Electricity distribution companies in Latin America also
include their concern for the health and safety of
electricity customers in their processes. Among
noteworthy activities in 2006, EEGSA, in Guatemala,
which is committed to providing high-quality service
to its customers and is concerned about the safety of
people working close to electricity grids, launched a
risk-prevention campaign for all construction workers.
Incidents for failure to comply with regulations relating to
product health and safety were minor in 2006. There were
two such incidents at ELFEO (Bolivia) and three at ESSAL
(Chile), all of which were of a minor nature.
Information on products and services
The Company’s aim is to provide useful information to its
customers on the features of its products and services.
The cornerstone of this policy is compliance with
applicable legislation relating to information provided to
consumers and ensuring similar compliance on the part of
the Company’s suppliers.
159
The various companies of the Group have implemented
initiatives to give customers better knowledge of the
characteristics of the product they use. The following such
initiatives deserve mention in 2006:
• In Brazil and Bolivia, distributors provide customers
with information on the contents of products and
services as well as the correct use thereof. COELBA
set in motion an accident prevention campaign
through its bills and magazines, as well as through
dissemination at schools and events in which the
company participates. CELPE carried out two
awareness-raising campaigns among its customers
on the efficient use of energy, and COSERN has
developed two educational projects on energy
efficiency intended for schools, communities, etc.
• In Guatemala, EEGSA carried out an information
campaign among its customers on home energy
saving methods, learning how to read consumption
on electricity meters, recommendations to contract
for new supply, electricity risks at home, precautions
in winter, remote service, etc.
Incidents for failure to comply with obligations were few
during the period and only affected ELFEO (Bolivia), where
there were three such cases.
Customer satisfaction
Channels for service and sale to customers in Spain
One of the key elements that determine the customer
satisfaction level is proper management of service and
sale channels. Because of the type of products supplied by
IBERDROLA, both the act of contracting itself and the
service provided to customers are crucial to resolve all
their inquiries or needs.
To ensure customer satisfaction, IBERDROLA devotes
particular attention to aspects such as:
• Definition of commercial processes and making
available to channels the tools to facilitate them.
Training of the persons who will come into contact
with customers.
• Requiring ethical behavior from all participating
players and also requiring that external collaborators
sign a Code of Ethical Conduct in their relations with
customers.
• Monitoring and control, applicable both to
IBERDROLA’s own channels and to outsourced
channels.
In 2006 IBERDROLA improved its Overall
Customer Satisfaction Index
The management of complaints is a key element in
IBERDROLA’s contract management and customer service
processes. The various subprocesses certified under the
UNE-EN-ISO 9001-2000 further evidence the Company’s
commitment to quality and to improving the service given
to customers and satisfaction of their needs.
As a result of the process of reviewing and following up
on complaints, opportunities are found to enhance
internal processes and boost customer satisfaction.
The Customer’s Voice
IBERDROLA wants to know its customers’ opinions, as
well as their concerns, needs and preferences. To that end,
in 1993 it set in motion an on-going study, known as
“The Customer’s Voice” [La Voz del Cliente] aimed at
identifying the areas of service that require priority
actions to gain or retain customer loyalty in Spain.
160
SOCIAL INFORMATION
The investigation method is mixed, combining both
qualitative and quantitative elements, and is summarized
in the following table:
Method
Quality in processes study
Since1999, this study measures our customers’ satisfaction
with each of IBERDROLA’s processes with which the
customer interacted, be it upon contracting, to make an
inquiry, because of an incident or due to any other
circumstance.
Qualitative
Objective:
Identify the customer’s service quality
requirements. Inquire about unmet
needs.
Frequency:
Every three years.
Results:
List of attributes of service to be measured
in the quantitative survey.
Quantitative
Objectives:
1. Measure the importance of
attributes.
2. Measure satisfaction.
3. Other specific goals.
Frequency:
Every three years.
Annually.
An average of approximately 250 interviews are
conducted monthly for each process.
The results of this study in 2006 are in line with those of
prior years, with a significant improvement in recent years
for the indicator relating to electricity complaints.
Customer satisfaction in Latin America
In Guatemala, in compliance with Section 114 of the
Regulations of the General Electricity Law, EEGSA
conducts an annual quality of service survey to evaluate
customer satisfaction. In such survey, it is rated by over
100,000 customers in the country as the best company in
all service quality, product quality and commercial quality
parameters.
Annually.
Results:
1. Weighting of attributes according to
importance.
2. Satisfaction information to prepare the CSI.
3. Other information.
In 2006, 1,000 interviews were conducted with customers
of the household sector, 700 at small businesses and
400 at industries and companies. As a result of the
Company’s effort to give its customers high-quality service
and attention, the Overall Satisfaction Index was 7.11,
an improvement over 2005, which was already good.
CHART 65
Overall customer satisfaction index
(%)
7.0%
2005
+1.57%
7.11%
2006
In Brazil, the distributors participate in consumer
satisfaction surveys conducted by the Brazilian Association
of Electricity Distributors, and the results of the
distributors managed by the Group are in line with those
of the prior year.
In Bolivia, a Customer Satisfaction Index report is
commissioned every year which, through individual surveys,
quantitatively measures the pulse of a representative group
of customers in connection with the perceived image of the
company. The overall index has remained stable, with
constantly rising rates mentioned as the issue creating most
concern; the quality of service at business offices, timely
delivery of bills and the information provided therein were
particularly valued by customers.
Advertising and Marketing
One of IBERDROLA’s goals is to give its customers true
and accurate information on its products and services.
Accordingly, it maintains commercial and advertising
practices that are respectful of the legitimate interests and
rights of its customers, providing the transparency
required to allow them to choose freely.
In this area, IBERDROLA in Spain is a member of the
Association for Commercial Self-Regulation [Asociación
para la Autorregulación Comercial] (Autocontrol), of the
Spanish E-Commerce and Relational Marketing Association
[Asociación Española de Comercio Electrónico y Marketing
161
Relacional] (AECEM) and of the Spanish Advertisers’
Association [Asociación Española de Anunciantes] (AEA) and
has subscribed to their ethical codes. It also subscribes to the
Electronic Commerce and Internet Advertising Code of
Ethics, which it communicates by inserting the On-line
Trustmark on its website, and has implemented a Code of
Ethical Conduct, compliance with which is mandatory by all
employees in the marketing area.
The agreements used for the supply of the Company’s
various products and services have been voluntarily
registered with the Register of General Contracting
Conditions [Registro de Condiciones Generales de
Contratación] maintained by the Ministry of Justice, with a
view to their total transparency and access to information
by consumers.
In 2006, in cooperation with official magazines and entities,
IBERDROLA has sponsored various energy-saving initiatives.
Worthy of mention is the printing of 7,000 copies of a
collectible entitled “Renewable energy for everyone”
[Energías renovables para todos] and cooperation with the
Community of Madrid in the publication of five books on
energy saving aimed at different customer segments,
1,000 copies of an interactive CD entitled “Energy-saving
advice in the Hospitality Industry” [Consejos de Ahorro de
Energía en el Sector de Hostelería] and over two million
copies of the diptych “A gesture to save energy? Choose A”
[Un gesto para ahorrar energía? Elige la A].
The three affiliated companies in Brazil also have a solid
base and thus, together with their advertising agencies,
they follow the recommendations of the Regulatoin of
the National Council on the Self-Regulation of
Advertising [Conselho Nacional de Autoregulamentaçao
Publicitaria] to prevent misleading advertising or
advertising that is abusive for the consumer.
162
Furthermore, the companies have internal policies and
codes that strengthen such commitment to customers.
Tthere were no issues during 2006 at any of the Group’s
companies for failure to comply with regulations relating
to product advertising or promotion.
Awareness of the “IBERDROLA” brand in the market is
rising. According to the monthly reports on IBERDROLA
Image Tracking [Tracking Imagen IBERDROLA] conducted
by GFK Emer Ad Hoc Research, total IBERDROLA brand
awareness stood at 73.7 in 2006 (average annual value),
five points above the 2005 percentage, thus continuing
with the rising trend of recent years.
IBERDROLA has subscribed to various
voluntary Codes of Ethics relating to marketing
and advertising
Customer privacy
IBERDROLA takes all necessary steps at all times to ensure
the security and confidentiality of its customers’ data.
Personal information provided by them is protected through
compliance with current Spanish legislation, primarily
Organic Law 15/1999 on Personal Data Protection.
IBERDROLA has established the organizational
procedures and information technology developments
required to fulfill requirements relating to: privacy
policy, with a special emphasis on the registration and
permanent updating of files with the Data Protection
Agency; the duty of confidentiality imposed upon
employees and subcontracted personnel; information to
the customer in the process of gathering personal data;
unequivocal consent for the treatment of such data; and
attention to the rights of interested parties at the
customer office.
In addition, IBERDROLA has established procedures for
the reporting and management of security issues in
connection with data confidentiality throughout the
entire treatment cycle for its customer files, pursuant to
the provisions of the Regulation on Security Measures
applicable to Computer Files set forth in Royal Decree
994/1999.
The treatment of personal data by third parties as a result
of the provision of services is regulated by contract,
including a detailed description of the technical and
organizational security measures that the party in charge
of handling the data has the duty to implement.
SOCIAL INFORMATION
In this connection, the personal data of customers are
stored exclusively in the centralized customer
management system and are therefore protected against
leaks, theft or loss, with no incidents being recorded with
respect thereto.
28 duly substantiated claims relating to customer data
privacy were received in 2006. Of these, 16 were received
directly from the customer, and the other 12 through
regulatory entities. The latter led to the commencement
of two informational proceedings by the Spanish Data
Protection Agency and of one proceeding which entailed a
penalty for IBERDROLA.
Other commercial activities in 2006
Commercial certifications obtained by IBERDROLA in
Spain
In compliance with the UNE-EN-ISO 9001:2000
standard, the Commercial Division has successfully
concluded a quality audit for the renewal of the
Customer Management Process Certificate and the
extension thereof to the Customer Service Process,
which entails further recognition of IBERDROLA’s effort
to provide high-quality services to its customers.
In addition, the Commercial Division contributed to
securing certification of the Environmental
Management System under the UNE-EN-ISO 14001:2004
standard.
The award of such certifications results in a lasting
relationship with the customer and helps to obtain the
maximum possible value from the assets managed by
the deregulated business organization in Spain.
IBERDROLA and the 2007 Spanish Challenge
IBERDROLA has continued to wager on sports, as the
main sponsor of the Spanish vessel participating in the
32nd annual America’s Cup, held in the waters of
Valencia. From its base in the port of Valencia,
the Spanish team has shown the fruit of its work,
placing fourth in the Louis Vuitton Ranking after
the 2006 preliminary races. In December, the ESP-97,
the new vessel that will compete in 2007 in the
Luis Vuitton Cup races prior to the America’s Cup, left
the shipyard in Anginet, Valencia, after more than
30,000 hours of work.
SUPPLIERS
Policies and rules of action in the purchasing area
IBERDROLA holds a significant position in the
international corporate area and belongs to a strategic
industry with tremendous purchasing capacity.
Considering the marked impact that purchases made have
on the Company’s earnings, there is a policy in place in
this area which includes the following commitments,
among others:
• Promote strict compliance by suppliers with
contractual terms and current laws and regulations,
with particular emphasis on respect for the
principles laid down in the United Nations Global
Compact.
• Reduce the overall cost of the products or services
to be contracted for to allow achievement of the
targets set by the Company’s management.
• Foster the environmental and social responsibility
of suppliers, encouraging the use and development
of technological means that are respectful of the
environment.
• Strengthen transparency and non-discrimination,
establishing an honest and open professional
framework, giving all companies the possibility of
securing orders and strictly applying IBERDROLA’s
Code of Professional Conduct.
• Promote a policy of stable relationships based on
the search for on-going improvement and mutual
benefit, furthering innovation and development
activities.
• Encourage cooperation in achieving the best
possible contractual terms for the supply of the
required products or services.
The responsibility for applying purchasing policies and
procedures and for relations with suppliers lies with the
Purchasing and Insurance Division, which reports directly
to the Company’s Economic and Financial Division.
163
Scope of the area
The IBERDROLA Group has registered more than
98,000 suppliers to provide its supplies. Of these, almost
78,500 are registered with affiliated companies in Spain
and about 19,500 in Latin America. In Spain, over
12,500 suppliers have received at least one order during
the year.
In 2006, total contracting volume of the Group’s
companies reached 7,653 million euros, which break
down as shown in table 65.
The main suppliers of the Group in Spain are listed
in table 66:
been established that allows it to work with those
suppliers that meet the minimum requirements.
In Spain, IBERDROLA uses a supplier classification system
known as RePro for the preliminary classification of its
suppliers (RePro is a database with updated information
on companies which is used jointly by the leading entities
of the energy industry). Access to RePro is open at all
times to any interested supplier. IBERDROLA periodically
announces the use of this system in the Spanish Official
Gazette [Boletín Oficial del Estado] and the Official Journal
of the European Union to enable any interested company
to register.
Suppliers and the products supplied must meet the
following requirements:
TABLE 65
Purchasing volume
Spain
Energy
Fuel
General supplies
Latin America
Energy
Fuel
General supplies
Total
2006
4,283
719
1,623
1,941
3,370
1,182
1,272
916
7,653
2005
3,629
820
1,107
1,702
2,562
952
729
881
6,191
TABLE 66
Principal suppliers in 2006
Gamesa
General Electric
ACS (Group)
Elecnor
ABB
Incoesa
Accenture
Prysmian Cables
Duro Feguera
Schneider
Requirements to be met by suppliers
To ensure efficient and high-quality service and as a
commitment undertaken upon adhering to the United
Nations Global Compact, IBERDROLA is in the process of
developing procedures and systems to extend responsible
practices in the labor, social and environmental fields to
its suppliers.
IBERDROLA’s supplier registration, selection and
qualification process follows standards of transparency,
impartiality and objectiveness, and a scoring system has
164
Quality
The supplier must have implemented standardized
management systems to ensure quality in production
processes and in the provision of services. In the case of
strategic products or services, the supplier is required to
have obtained ISO 9000 or equivalent certification. With
regard to critical equipment and materials to be used in
energy distribution facilities, the product must be certified
under quality marks.
Safety
The Company demands compliance with applicable
legislation regarding Occupational Risk Prevention.
The Company evaluates the implementation of a
management system in accordance with current
regulations, and encourages certification under the
OHSAS-18001 Standards.
The Company includes a “Zero Accident Target Plan” in its
supply chain, aimed at reducing the number of incidents
in the activities carried out.
Environment
As part of the process of continuous improvement of its
suppliers, the IBERDROLA Group promotes and
encourages the implementation of Environmental
Management Systems in purchasing chain management,
and requires such implementation by new suppliers of
materials, works and services who request qualification for
products that are deemed critical or strategic.
In the product qualification process, suppliers must
answer specific questions on waste management at their
facilities, the use of contaminating materials and final
disposal of the product at the end of its useful life.
SOCIAL INFORMATION
Social Responsibility
In 2002, IBERDROLA pledged its firm support for the
principles of the Global Compact, an initiative of the
Secretary General of the United Nations, which seeks to
promote responsible behavior in matters dealing with
human rights, the environment, labor regulations and
corporate ethics.
The Company therefore encourages its suppliers to
comply with certain codes of conduct, to adhere to the
Global Compact, and to ensure compliance with human,
labor and environmental rights.
If there is a prospective supplier in so-called “at-risk”
countries, such supplier must answer specific questions
regarding working conditions at its facilities, compliance
with and respect for human rights in manufacturing
processes, and the supplier’s duty not to employ child
labor.
TABLE 67
Supplier Center Statistics
Calls answered
Action arising from calls
Average resolution time (hours)
Number of inquiries resolved in less
than 8 hours
Complaints responded to
2006
25,752
16,240
12.49
2005
25,669
15,603
20.18
>50%
14
>50%
25
Supplier survey
IBERDROLA considers its suppliers as business partners
and wants relationships to be long-term and based on
mutual benefit. Accordingly, it believes it necessary to
obtain their opinion and measure their satisfaction level.
The Company has set itself the goal of conducting this
survey every two years.
In 2006, the volume purchased in these countries from
Spain did not reach 0.5% of total purchasing volume of
materials and services.
In the last survey, conducted in 2005 among a significant
group of suppliers, they rated their relationship with
IBERDROLA as outstanding.
Work is underway at practically all Latin American
subsidiaries to include human rights clauses in
agreements with suppliers.
No supplier surveys have been conducted to date in Latin
America. There are plans to conduct one in Bolivia in
2007.
Generally speaking, no purchases are made in “at-risk”
countries. However, since the second half of 2006, there is
a procedure in Guatemala for action with suppliers in
at-risk countries, which calls for the inclusion of a
“Social Responsibility and Human Rights” clause in the
agreements with such suppliers.
Supplier portal
IBERDROLA provides a supplier portal to its suppliers
through its website. Its contents are divided into two
parts:
Relationship channels with suppliers
EThe relationship channels with suppliers receive the
comments, opinions, proposals and information provided
by suppliers on those aspects that entail opportunities for
the improvement of the relationship, and the information
is channeled to ensure it reaches the areas involved.
Supplier service center in Spain
The supplier service center in Spain is equipped with a
telephone switchboard as a single access point to deal with
problems and questions that may arise from the commercial
relationship with any supplier.
In addition, this center channels suggestions, complaints
and claims made by suppliers to the appropriate
organizations in each case. Table 67 shows the most relevant
statistics of this service.
• Information and questions
- General information (public access)
- Supplier information (limited access)
• Operations
- Calls for Bids: Suppliers may track the bidding
process, from bid solicitation to award, view all calls
for bids in which they have been invited to
participate, and enter their bids.
- Automatic submission of invoices: This process allows
suppliers to submit their invoices directly on
IBERDROLA’s computer system, thus avoiding
unnecessary delays.
12,300 invoices were submitted in this manner in 2006.
In Latin America, there is a supplier section on the web in
Brazil and Mexico.
165
Supplier register
Any company interested in becoming an IBERDROLA
supplier has quick, safe and non-discriminatory access to
the basic questionnaire that may be found in the supplier
section on the IBERDROLA website.
Basic registration data include the name of the company,
the products and services it supplies, its financial
condition, compliance with legal requirements, status of
quality management systems, the environment,
occupational risks and whether the company has specific
sustainability policies in place.
Local suppliers
IBERDROLA is committed to the economic growth of
the various countries in which its affiliates operate.
This statement is reflected in the fact that purchases
from local suppliers (suppliers in the same country as
the purchasing company) account for 92% of purchases
made in Spain and 97% of purchases in Latin America,
not including fuel.
IBERDROLA’s purchases from local suppliers
account for 92% of the purchases it makes in
Spain
In Spain, IBERDROLA applies the same policy in the
various autonomous communities in which it operates.
Accordingly, to increase purchases from local suppliers
registered in the areas where the supplies are required,
periodic meetings are held with regional corporate
forums, to inform them of the steps to be followed by
companies interested in working with IBERDROLA. In
2006, the number of suppliers registered in all
Autonomous Communities increased once again.
Special employment centers
The Company has been working quite actively since 2004
to increase the volume purchased from Special
Employment Centers, in order to help persons with
disabilities. More types of materials and services were
contracted from that group in 2006 and close to one
million euros were awarded.
166
THE MEDIA
Introduction
Communication is an essential tool for IBERDROLA to
transmit and make public the most salient aspects of its
strategy and the development of its activities; its
primary aim is for messages to be received clearly and
transparently by all the Company’s interest groups.
The policy implemented by IBERDROLA in its relations
with the media is based on the utmost rigor in
communications, reliability, permanent availability and
timeliness in responding to requests for information.
Responsibility for relations with the media and for the
strategy for communications with society at large lies
with IBERDROLA’s Communications Manager, who
reports directly to the Company’s Director of Corporate
Resources.
As in prior years, the Communications Division
enhanced its work through IBERDROLA’s corporate
website www.iberdrola.com, which has been redesigned
and which is increasingly used by journalists and
interest groups in general, becoming an essential tool
for the Company’s communications.
The website and audiovisual reports were two of the
tools most promoted by the Company in 2006 to
provide broader, detailed and varied information on its
activities, in line with its information policy and
objectives. One example is the reports on the
Maranchón (Guadalajara) Wind Farm, the largest in
Europe, or the Operations Center (CORE) which controls
all of IBERDROLA’s wind farms from Toledo.
Press releases and press conferences
In 2006, IBERDROLA distributed 348 press releases to
the media, of which 170 were nationwide in scope and
the remaining 178 were regional. Mentions in the
printed press came to 10,976 in 2006. Of these,
5,508 references were published in local media and
5,468 in regional newspapers. The average of
information published in all national and regional
newspapers was 30 mentions a day.
SOCIAL INFORMATION
There were almost 11,000 mentions of
IBERDROLA in the printed press in 2006
The press conferences held by IBERDROLA’s Chairman
focused on earnings releases, the Shareholders’ Meeting,
the new 2007-2009 Strategic Plan and an explanation of
the combination agreement with ScottishPower. Such
conferences were widely reported in written and
audiovisual media. The Company also held press
conferences on the occasion of the commissioning of the
largest wind farm in Europe with 4,000 MW renewable
energy installed capacity, and the opening of various
facilities in different Autonomous Communities. All press
releases distributed with detailed information are
available on our website.
CHART 66
Distribution of press releases by geographical areas
(%)
National: 48.85%
Castilla-La Mancha: 11.20%
Valencia: 10.92%
Castilla and León: 6.90%
Murcia: 5.75%
Extremadura: 4.88%
Basque Country: 4.31%
Navarra: 2.87%
Madrid: 2.30%
La Rioja: 1.15%
Andalucia: 0.30%
Galicia: 0.30%
Aragón: 0.30%
Renewable energy: The new international renewable energy
projects, coupled with inauguration of new facilities in Spain
and the ensuing increase in installed capacity, which
cemented IBERDROLA’s worldwide leadership in this
industry, was the principal news issued in 2006. Milestones
worth noting are the commissioning of the Maranchón
(Guadalajara) wind farm and the new goal set by the
Company to exceed 10,000 MW in capacity by 2011.
Internacional: The Company’s international expansion
was reflected in the large number of press releases
issued during 2006, reporting on the various projects
and agreements signed in various countries such as
France, the United States, Greece, the United Kingdom
and Brazil. In addition to expansion in the renewable
energy industry, worth noting are the new hydroelectric
projects in Brazil, the award of a combined-cycle plant
in Figueira da Foz (Portugal) and, as a noteworthy
milestone in 2006, the commissioning of the Altamira V
plant, the largest in Mexico.
Deregulated business: In the Generation area in Spain,
worth mentioning was the information on the
commissioning of the Escombreras combined cycle plant, in
Murcia, with 800 MW capacity, and the 70% increase in
installed capacity since 2001, as well as the increases in clean
energy production and in hydroelectric reserves.
CHART 67
Mentions in the press by subject
(%)
Principal IBERDROLA information milestones in 2006
Corporate: The most relevant news generated in this area
was the appointment of Ignacio Galán as the new
Chairman of IBERDROLA and the subsequent change of
part of the Board, together with the successful conclusion
of the 2001-2006 Strategic Plan and the submission of the
new Plan for the next three years, which provides for
investments of 9,000 million euros through 2009.
Starting in November, full information was provided on
the combination agreement with ScottishPower, for
17,200 million euros, another of the most significant
information milestones of 2006.
Distribución: 11.58%
Financial & stock market: 12.08%
Affiliated companies: 5.38%
Generation: 4.98%
Regulated Business: In the Distribution area, the
informational milestone was the ten million customers
reached by the Company in August of last year, which target
it achieved while maintaining the best quality of supply
indices in Spain.
Renewable energy: 4.27%
International: 2.91%
Supply: 2.13%
Environment: 2.10%
Human resources: 1.10%
Gas: 0.65%
Corporate Information: 52.82%
Source: IBERDROLA
Subsidiaries: Noteworthy in this sector is the information
on the significant international expansion of Iberdrola
Ingeniería y Construcción, with major contracts for the
construction of plants in Syria, Qatar and Latvia. Iberdrola
Inmobiliaria continued to expand its business both at the
domestic and international level, where the agreement
signed at the end of the year with Caixa Geral de Portugal
167
for the joint development of activities deserves special
mention.
Financial: The most important news in 2006 was
the acquisition by IBERDROLA’s employees of almost
400,000 shares after allocating a portion of their variable
compensation to the purchase of Company securities and
the possibility offered to shareholders for the first time to
reinvest dividends in shares, in a transaction free of
settlement and contracting fees.
Internet press section
IBERDROLA’s website, www.iberdrola.com has become a
routine channel of communication between the Company
and journalists carrying out their professional tasks in both
the written and the audio-visual media.
Throughout 2006, IBERDROLA has sought to enhance
this channel of communication with the press and,
with this purpose in mind, has inaugurated a new
website whose main features are greater flexibility to
highlight all types of business and corporate
information, better browsing capability, a more modern
image tailored to the Company’s strategic objectives
and the Double-A level of the accessibility guidelines for
the web 1.0 content of the W3C-WAI.
Finally, journalists can also find in this chapter a link to
the full menu devoted to the general shareholders’
meeting and another section with an extensive
description of IBERDROLA’s new 2007-2009 strategic
plan.
A service that is used increasingly each year
The enhanced role of IBERDROLA’s website as a channel
for communication with journalists was reflected in 2006
in the number of visits to the press section (147,638),
which increased sharply from 2005, as shown in chart 68.
CHART 68
Visitors to the press section of the website
(no. of visitors)
147,638
+55%
95,348
2005
The IBERDROLA website obtained the Double-A
level Accessibility certificate issued by
Technosite
The Company also continued to redesign the Press section
devoted to journalists, with the inclusion of new content
intended to provide a real-time response to all of the
media’s information needs.
The press menu displays all press releases sent by
IBERDROLA to the media since 2001 in chronological
order, in both Spanish and English. It also provides a
service in high demand by communication professionals:
a picture gallery.
The periodic information heading groups all documentation
communicated by the Company to its investors,
shareholders, customers and the public at large. This annual
report, for example, or the significant events sent to the
CNMV may be found there. The presentations section is
a link to the videoconferences offered from time to time
by Company managers.
168
2006
More than 260,000 pages were visited, with a daily
average of more than 700, and over 300,000 documents
were downloaded.
Press releases was the most viewed section, with
80,670 visitors (compared to 54,681 in 2005),
who browsed 135,031 pages and downloaded
157,684 documents, accounting for over 50% of the
visitors, pages viewed and document downloads for the
entire section.
There were almost 150,000 visits to the press
section of IBERDROLA’s website in 2006
SOCIAL INFORMATION
SOCIETY
Introduction
IBERDROLA maintains a policy of strong involvement in
the development of the communities it serves. This
historical commitment to support them is a strategic
element of the Company, supported by mechanisms of
cooperation with relevant social institutions of the
government and of civil society.
IBERDROLA has five macro action programs in its
relationship with society:
• Community economic development
• Art and Culture
• Education and Training
• Community Service
IBERDROLA’s 2007-2009 Strategic Plan includes a number
of objectives which will have substantial positive impacts
on the societies served by the Company. This is illustrated
by the following estimated figures:
• Investments of 9,000 million euros (62% in Spain).
• Investments in Research Development and Innovation
(R&D&i) in excess of 200 million euros.
• Purchases from suppliers with a value of 9,500 million
euros (of which 7,600 million euros were from Spanish
companies).
• Over 1,000 professionals hired by the IBERDROLA
Group.
• Expected contributions to public treasuries, through
taxes, of 6,500 million dollars.
The activities carried out in the social field are
developed through the following channels:
• In Spain, through the IBERDROLA Group’s companies
and through Fundación IBERDROLA.
• In Latin America, through its affiliated
companies.
In Spain, responsibility for promoting relations with
institutions and managing social action programs lies
with the Director of Corporate Resources, who has the
Institutional Relations Division to aid him in such task,
as well as the cooperation of the rest of the
organization, particularly the Institutional offices in the
Autonomous Communities. Affiliated companies in
Latin America have their own community relations
management structures.
• Environment
Affiliated companies in Latin America also have
programs in place for carrying out social activities that
are specifically tailored to the special needs of the
communities in which they operate. A summary of
those programs is provided in this “Society” chapter.
More detailed information may be obtained in their
respective Annual Reports or on their websites.
Significant lines of action in 2006
In 2006, IBERDROLA carried out a large number
activities in line with the programs described above.
Worth emphasizing are the activities directed towards
helping persons with disabilities, continuing the process
commenced last year, which have become a priority line
of work in the Company’s social actions, supported by
its policy of contracting for products and services from
Special Employment Centers, described in the
“Suppliers” chapter.
The following special Projects carried out in 2006 are also
worth noting:
• Involved [Implicados] Project
The purpose of the Project, carried out by IBERDROLA
in cooperation with Fundación Iberdrola and the
appropriate Autonomous Institutions, is to promote
competitive access of persons with disabilities to the
labor market, to allow them to become fully integrated
into society.
In 2006, the Fundación de la UNED and the Fondo de
Formación. joined the Project as not-for-profit
collaborators.
169
Furthermore, work commenced on the development
of the Albacete Project, in cooperation with ASPRONA,
to implement a competitive production model at a
Special Employment Center [Centro Especial de
Empleo] (CEE) of that company. 2006 saw the first
training stage of the persons who will be in charge of
the management of the future CEE, which will benefit
an estimated 170 persons with disabilities, starting in
2008.
• Volunteerism days’ project
Volunteerism days are an important part of
IBERDROLA’s Corporate Volunteerism Program which
is described elsewhere in this report. These days are
aimed at offering leisure activities to groups of persons
with disabilities in the regions served by the Company.
A cooperation agreement was also signed with
Lantegi-Batuak to develop corporate organization
systems especially designed for persons with
disabilities.
• Website accessible to persons with disabilities
project
IBERDROLA’s new website was awarded the Double-A
level Accessibility certificate by Technosite (a company
belonging to Fundación ONCE). This level ensures a
high level of access for all persons browsing in it,
regardless of their disability, age or the technology
used.
• ADOP Project
IBERDROLA wants to help make the life of persons with
disabilities as full and independent as possible, including
competition at the highest sports level. With that
objective in mind, it sponsors the ADOP Program, whose
purpose is to give Spanish participants in the Paralympic
Games the means required to prepare for the 2005-2008
competition schedule. The key events of such period are
the 2006 Winter Paralympic Games in Torino, in which
our athletes have been remarkably successful, and the
2008 Paralympic Games in Beijing.
In April 2006, the ADOP Program received the “Olympia”
award, as part of the National Sports Awards organized
by the Superior Sports Council [Consejo Superior de
Deportes].
Support for persons with disabilities has
become a priority line of work in IBERDROLA’s
social actions
• Company and Disability Project
IBERDROLA participates actively in the “Company and
Disability” [Empresa y Discapacidad] project, promoted
by Fundación Empresa y Sociedad and by Fundación
ONCE. It is a three-year (2005-2007) multi-company
work Plan specially designed to facilitate the
achievement of joint three-year goals.
The areas of work for participating companies are: design
of products and services that are accessible to everyone,
access to computer systems and facilities, and creation of
direct and indirect employment for persons with
disabilities.
170
There were more than 200 IBERDROLA volunteers and
over 1,200 participants in these events in 2006.
IBERDROLA has been a pioneering company in this
field within the Spanish energy industry, and was thus
the first company to receive the Double-A level
certificate from Technosite.
It is also included among the ten Spanish websites that
provide better service to persons with disabilities
(according to a report from the specialized firm Adesis
Netlife).
• “2015: A better world for Joana” campaign
As a member of the Corporate Reputation Forum,
IBERDROLA has taken up the commitment to the
“2015: A better world for Joana” initiative, which
involves the largest communication campaign in
the service of the UN and governments, sponsored
by an inter-industry group of companies; it is
estimated that it will reach over 100 countries,
more than 830 million customers and almost
700,000 employees.
This project is aimed at promoting and
disseminating the eight Millenium Development
Goals, set in motion by the United Nations to
improve people’s quality of life on a global scale.
The campaign was prepared during the last quarter
of 2006 and was publicly unveiled on January 11,
2007. It is to be carried out during 2007 and
subsequent years.
SOCIAL INFORMATION
• Electrification programs in Brazil
The Brazilian companies of the Group (COELBA,
COSERN and CELPE) continue with the development of
the Rural Electrification Programs, undertaken jointly
with the public administrations. Their purpose is to
provide electricity infrastructure to the entire
population of the country, to facilitate economic and
social development and minimize the differences
among the various regions and between the urban and
the rural areas.
These efforts began in 1999 with the “Light in the
Countryside” [“Luz no Campo”] program. There are
currently various programs in place: “Light for
Everyone” [“Luz para Todos”], “Electrification Program
for the Underprivileged Population” [“Programa de
Electrificaçao para Populaçao Carente”], and others;
they are the largest rural electrification programs
undertaken in Latin America, and some of the most
important worldwide.
Dedicated resources
During fiscal year 2006, the IBERDROLA Group allocated a
total of 14 million euros, in consolidated terms, to the
programs described in this chapter, as shown in table 68.
TABLE 68
Social Action Resources
(Thousands E)
2006
Spain
Latin America
Total
8,316
5,645
13,961
In addition, the funds allocated to Rural Electrification
Programs in Brazil totaled 59 million euros in
consolidated terms for the Group (see table 69).
TABLE 69
Electrification programs
(Thousands E)
2006
COELBA, COSERN and CELPE
59,357
Fundación Iberdrola
Fundación Iberdrola plays a key role in the social activities of
the Group. Created in 2002, its primary goal is to contribute
to the general interest of society through the promotion,
dissemination and support of social, cultural, scientific and
technical activities; social actions are especially addressed at
the integration of persons with disabilities into the
workplace.
The activities of Fundación Iberdrola in 2006 focused
primarily on the following two programs:
• Community service
• Cultural promotion
The principal activities carried out under both programs
are summarized below.
Community service program
The foundation has launched its 2nd Appeal for
Assistance for Social Projects. As a result, it is cooperating
with ten recognized Spanish entities which carry out
social assistance projects intended primarily for senior
citizens who are not self-sufficient, persons with
disabilities, immigrants and other underprivileged groups.
The following projects deserve mention because of their
uniqueness:
• “Transformation and distribution of fruit surpluses into
juices for humanitarian aid” developed in cooperation
with the Spanish Food Bank Federation [Federación
Española de Bancos de Alimentos].
• “Entry into society and the job market of women who
are victims of trafficking in human beings for the
purpose of sexual exploitation”, in cooperation with
Religiosas Adoratrices/Proyecto Esperanza.
• “Training of immigrant persons to care for senior
citizens who are not self-sufficient”, in cooperation with
the Association for Geriatic Family Assistance
[Asociación para la Asistencia Geriátrica Familiar]
in Catalonia-ASGER.
• “Program for the qualification of immigrants in the
care of persons who are not self-sufficient: social and
employment itinerary”, in cooperation with the
Association of Relatives of Patients with Alzheimer’s
[Asociación de Familiares de Enfermos de Alzheimer]
(AFAL).
171
Cooperation also continued with the Raya Duero Project
begun in 2004, together with Fundación Encuentro, with
the purpose of promoting the sustainable development of
the populations of the Ribera del Duero region, in the
provinces of Salamanca and Zamora. This project seeks to
act as a catalyst to increase social and cultural
development in the region, by opening up new horizons
for economic and social activities that may be carried out
in this area bordering with Portugal.
Cultural Promotion Program
Continuing with the important work of Fundación
Iberdrola in recent years in support of the preservation
of the Spanish Historical Heritage, the restoration and
lighting of the Cartuja de Miraflores church, in Burgos,
which includes the royal sepulchers of Juan II and
Isabel of Portugal, of Infante D. Alfonso, the Central
Altarpiece, both by Gil de Siloe, and the windows, all of
them considered exceptional examples of the Gothic
art of Burgos, were finished in 2006.
These works were carried out under the agreement
signed in 2004 by Fundación Iberdrola with the
Government of Castilla and León, the Burgos
Archbishopric, Fundación del Patrimonio Artístico de
Castilla y León and the Fondo Español para la
Conservación y Restauración de Monumentos-World
Monuments Fund España.
IBERDROLA actively cooperates with significnat
institutions of government and civil society
Community economic development
IBERDROLA’s purpose with this Program is to improve the
competitiveness of the communities it serves, providing
its added value as a large technological and international
company.
Overall resources allocated to this area totaled more than
two million euros in 2006; in Spain alone, IBERDROLA
carried out more than 150 activities in this field. The most
noteworthy programs and projects were the following:
Regional Advisory Boards
IBERDROLA has created Advisory Boards in Castilla and
León, Andalucia and Valencia, consisting of the highest
representatives from the major industrial and financial
groups of these Autonomous Communities.
The primary goals of the Advisory Boards are to share
business projects, exchange management and innovation
experiences and channel new initiatives that contribute to
the development of the respective regions.
Support for corporate entities and initiatives
IBERDROLA participates in a number of regional
development entities, as well as in several Technological
Centers, the most important of which are listed below:
Entities promoting development in which
IBERDROLA participates
• Centro de Estudios Latinoamericanos (CESLA)
• Fundación Rei Afonso Henriques (Castilla y León)
• Asociación Bilbao Metrópoli 30
On the occasion of this restoration activity, the
“Light of Flanders” [“La Luz de Flandes”] exhibition was
held in Cartuja to present to the public the renewed
image of Cartuja, and as a didactical exhibition of the
techniques currently used to recover the artistic heritage.
In the cultural sphere, worthy of mention is a new book
published as part of Fundación Iberdrola’s Library of
the Spanish World Collection [Colección Biblioteca del
Mundo Hispánico]: “The Dynasty of the Trastámara”
[“La Dinastía de los Trastámara”].
This new book, authored by Professor Julio Valdeón
Varuque, Professor of the University of Valladolid and a
specialist on that period, continues with the general
readership collection begun in 1977 of historical and
cultural publications on Spain and Latin America.
172
• Fundación Caja Rural de Toledo
• Asociación Plan Estratégico Ciudad de Burgos
• Sociedad Riojana de Capital Riesgo (RICARI)
• Cluster de la Energía (País Vasco)
• Fundación Concordia para el Desarrollo Económico y Social
(Madrid)
• Fundación de la Energía de la Comunidad de Madrid
• Asociación para el Desarrollo Sostenible (ACLIMA)
• Fundación Navarra para la Calidad
• Agencia Regional de Gestión de la Energía de Murcia (ARGEM)
• Fundación Corporación Tecnológica de Andalucía
• Asociación de empresas e instituciones 22@Barcelona
SOCIAL INFORMATION
Technological Centers in which IBERDROLA
participates
Castilla and León
• Desarrollo de Telecomunicaciones (CEDETEL)
• Automatización, Robótica, Tecnologías de la Información y de
la Fabricación (CARTIF)
• Investigación y Desarrollo en Automoción (CIDAUT)
• Empresas e Innovación (CEICALSA)
Basque Country
• LABEIN
• INASMET
Navarra
• Fundación CETENASA
• Centro Europeo de Empresas e Innovación de Navarra (CEIN)
• Asociación de la Industria Navarra (AIN)
Valenciana
• Instituto de Tecnología Eléctrica (ITE)
• Instituto de Aplicaciones de las Tecnologías de la Información
y de las Comunicaciones Avanzadas (ITACA
Murcia
• Centro Tecnológico del Medio Ambiente
• Centro Europeo de Empresas e Innovación de Cartagena
Castilla-La Mancha
• Centro Europeo de Empresas e Innovación de Talavera de la
Reina
IBERDROLA has also joined the Forum of ExcellenceInducing Companies, and Organizations [Foro de Empresas
y Organizaciones Inductoras de la Excelencia], a advisory
body of the Government of Castilla and León, in order to
help enhance innovation and the competitiveness of small
enterprises in that region.
Dissemination of corporate social responsibility
IBERDROLA participated in 22 Workshops promoting
Corporate Social Responsibility (CSR), presenting the
“IBERDROLA model” in corporate and academic forums..
The Company also participated, together with BBVA and
Fundación Entorno, in the on-line “RSE + 5” course, aimed
at helping small and medium enterprises improve their
sustainability strategies.
Latin America
Affiliated companies in Latin America carry out and
support various social and economic development
projects. The following initiatives are worth mentioning in
2006:
COELBA
The ELOS (Energia Local Organizada e Sustentável) Project,
developed in cooperation with Banco de Brasil , the
Ministry of Mines and Energy and other institutions, is a
pioneer initiative in Brazil. Its goal is to generate
sustainable development in the communities of the State
of Bahía served under the Rural Electrification Program
“Luz para Todos”.
COSERN
It has carried out several R&D and Innovation projects
with the purpose of enhancing the electric infrastructure
of its customers and of the company itself.
CELPE
It cooperates with many organizations that promote the
economic and corporate development of the community.
Worthy of mention is the support to the Ethos Social
Responsibility Institute [Instituto Ethos de Responsabilidad
Social], the “Corporate Action” [“Açao Empresarial”]
organization and Fundación Abrinq.
EEGSA
EEGSA, together with the Comisión Nacional de Energía
Eléctrica and the Cámara de Industria de Guatemala, has
launched a “Program to Reduce the Cost of Service of
Electric Power” [Programa para la Reducción del Costo del
Servicio de Energía Eléctrica”], intended for customers
penalized by reactive energy or surplus power contracted
for. The program is expected to benefit over 2,000 SMEs,
providing significant annual savings in electricity bills.
Art and culture
IBERDROLA’s goal with this Program is to foster the
artistic and cultural development of the communities it
serves, with particular emphasis on the illumination of
historical heritage.
Overall resources allocated to this purpose in 2006
reached almost six million euros; in Spain alone,
IBERDROLA, carried out over 130 activities in this area.
The following were the most significant programs and
projects:
Monument reconstruction and lighting
The monument reconstruction and lighting Program is
one of the initiatives that has earned IBERDROLA the
most accolades in the cultural sphere. The following
activities in 2006 to recover the Spanish artistic heritage
are worthy of mention:
173
Patio Embajador Vich (Valencia)
IBERDROLA participated in the reconstruction of the Patio
Embajador Vich in the Valencia Fine Arts Museum, which
is a fine example of Spanish Renaissance architecture.
Other cultural activities
IBERDROLA continued with its policy of sponsoring
cultural events or institutions in various fields, among
which the following are worth noting:
The following projects for the lighting of unique buildings
deserve mention in 2006:
• Music
- Asociación Bilbaína de Amigos de la Ópera (ABAO)
-
Cathedral and Walls of Ciudad Rodrigo (Salamanca).
- Fundación Orquesta Sinfónica de la Región de Murcia
-
Casita del Príncipe, in El Escorial (Madrid).
- Orquesta Sinfónica Joven del Alfarafe (Andalucía)
-
Sanctuary of the Virgen del Rosario in Hellín (Albacete).
- Sociedad Coral de Bilbao
-
Plaza de Sancho García, Church of Santa Cecilia and
Palace of the Marqués de Chiloeches, in Espinosa de los
Monteros (Burgos).
- Orfeón Donostiarra (Guipúzcoa)
Support to cultural institutions
IBERDROLA continued to support the various foundations
and cultural institutions with which it cooperates.
Foundations and cultural institutions supported by
IBERDROLA
• Fundación Príncipe de Asturias
• Fundación San Benito de Alcántara (Cáceres)
• Fundación Rei Afonso Henriques (Zamora)
• Theater
- Festival de Teatro Clásico de Alcántara (Cáceres)
- Teatro Calderón de la Barca (Valladolid)
• Painting
- Fundación Museo Ramón Gaya (Murcia)
- “Premio Salón de Otoño” del Ateneo Mercantil de
Valencia
- Exposición “La Faz de la Eternidad” (Alicante)
• Fundación Museo Guggenheim Bilbao
• Fundación Museo de Bellas Artes de Bilbao
• Fundación San Millán de la Cogolla (La Rioja)
• Fundación del Patrimonio Paleontológico de La Rioja
• Fundación Carolina (Madrid)
• Fundación Amigos del Museo del Prado
- Certamen de Pintura Universidad Miguel HernándezIBERDROLA
Latin America
Practically all affiliated companies in Latin America have
sponsorship activities in the artistic and cultural fields.
• Fundación La Luz de las Imágenes (Valencia)
• Fundación Orfeó Catalá-Palau de la Música Catalana
• Fundación CIDOB (Barcelona)
• Fundación Atapuerca (Burgos)
IBERDROLA and its affiliated companies in Latin
America carry out recognized sponsorship
activities in the artistic and cultural fields
• Fundación Baluarte (Navarra)
• Consorcio Casa de América
• Real Asociación de Amigos del Museo Reina Sofía
• Real Academia de la Lengua Española
• Asociación Amigos del Museo Nacional de Escultura de
Valladolid
• Museo de la Ciencia (Valladolid)
• Fundación Cultural Santa Teresa de Ávila
• Palau de les Arts Reina Sofía de Valencia
• Museo Etnográfico de Talavera de la Reina (Toledo)
174
México
In 2006, IBERDROLA completed its 800,000 euro
contribution to the Biblioteca Vasconcelos, the most
important public library in Mexico, belonging to the
Consejo National para la Cultura y las Artes (CONACULTA).
The Library has state-of-the-art digital information
technology. “Libronauta” offers the possibility of
publishing a book according to the author’s specifications
and has over 1,000 digital books. It also provides access to
blind people.
SOCIAL INFORMATION
Brazil
COELBA has supported over 120 cultural sponsorship
Projects since its creation (in 1997), to which more than a
million persons have had access.
Principe de Asturias Chair in Science and Technology
of the University of New Mexico
This chair, sponsored by IBERDROLA, was promoted
jointly by the Company and the US Embassy in Spain.
COSERN is the company in the State of Rio Grande do
Norte that invests the most in culture. In addition to
specific activities sponsored each year, particularly
noteworthy are its on-going initiatives such as Circo da
Luz, Operart, Casa da Ribeira, COSERN Musical,…
The first meeting of the Advisory Committee of the
Chair was held in Madrid in 2006, and was attended by
important representatives of the University of New
Mexico, of the Ministry of Education and Science and of
our Company. The principal activities of the Chair and
of the IBERDROLA scholarship-holders were described at
such Committee, as well as the actions for cooperation
with other universities in Europe and particularly in
Spain.
CELPE has cooperated in various projects in theater,
movies, publications, etc.
Guatemala
EEGSA has sponsored several books and cooperated in
the “Magic and Mystery II” [Magia y Misterio II] cultural
project, consisting of a collection of installments
distributed with the “Prensa Libre” newspaper.
Chile
ESSAL has sponsored the 17th International Theater Fair of
Puerto Montt and also participated in the 12th Book Fair
held in that city.
Bolivia
ELFEO participated in the EXPOTECO Fair and Exhibition
held in the city of Oruro.
Education and training
IBERDROLA’s goal in this Program is to improve the
training and specialization of different groups within
IBERDROLA’s surrounding environment, particularly of
university students and professional groups. It also
seeks to increase general cultural on electric safety and
the efficient use of energy.
In 2006, resources of almost two million euros were
allocated to activities in this field; in Spain alone,
IBERDROLA carried out more than 90 activities in this
area. The most salient programs and projects were the
following:
IBERDROLA supports initiatives aimed at
excellence in the education and training of
people
Fundación Cultural Hispano-Brasileña
IBERDROLA has established a cooperation agreement with
Fundación Cultural Hispano-Brasileña aimed at improving
the knowledge of Brazilian culture in Spain. This
Foundation cooperates regularly with the Universidad de
Salamanca, the Universidad Complutense de Madrid and
the Universidad de Valladolid.
Support of other institutions
Institutions supported by IBERDROLA
•
•
•
•
•
•
•
•
Fundación San Benito de Alcántara
Fundación COTEC
Fundación de Estudios Financieros (FEF)
Fundación de Estudios de Economía Aplicada (FEDEA)
Fundación Pro Real Academia Española
Real Academia de Ingeniería
Fundación Alternativas
Real Sociedad Española de Física
Support for universities and other institutions
IBERDROLA promotes various activities (masters
programs, seminars and courses, etc.) in cooperation
with universities. (some 30 universities and
foundations related thereto). Particularly relevant in
this area were the following.
175
Training in electrical safety and efficient use of
energy
IBERDROLA has taken different initiatives to train
technicians and specific groups, as well as to inform
customers of the issues relating to safety and the efficient
use of energy. The following were worth noting in 2006:
Brazil
The following table shows the most noteworthy initiatives
• Training of specific groups
Courses and training on safety in the use of various
types of electricity installations were given during the
year to the following groups: Firemen in Biscay,
Guadalajara, Murcia and Valencia, the Madrid Police,
and technicians and installers in general in the Basque
Country, Burgos, Toledo, Extremadura and Valencia.
• Energía Amiga
Projects carried out or supported
COELBA
• Agente COELBA
• Proyecto SOS Energía
• Inclusión Digital
• Faz Universitario
• Internet en las comunidades
• Joven Ciudadano
CELPE
• Agreement with the Community of Madrid
In 2006, an Agreement was signed with the
Community of Madrid to promote energy saving and
efficiency. Various activities were carried out
thereunder, such as the ”Renewal” [Renove] Plan for
electricity installations in apartment buildings; the
“Renewable Energy for Everyone” [Energías Renovables
para todos] collection of brochures intended for
mid-level teaching institutions, and the diptych on
energy labeling, distributed to the Company’s
household customers.
• Information campaigns
IBERDROLA also transmits messages on safety
and efficiency to consumers through various
initiatives: participation in Public Workshops, the
“IBERDROLA Bus” [Autobús IBERDROLA], which has
made informative visits to 89 cities since 2005, etc.
Furthermore, IBERDROLA’s Electricity Museum in
San Agustín de Guadalix (Madrid) has received more
than 20,000 visitors since it opened in 2003.
Latin America
Practically all affiliated companies in Latin America
cooperate with training actions in their communities.
Most of these activities are aimed at improving the
professional training of young people, with the specific
goal of increasing their chances of entering the job
market. Other significant actions refer to enhancing
training and information on the safe and efficient use of
electric power among customers.
176
• Instituto Ayrton Senna
• Junior Achievement
• Instituto Calidad en la Enseñanza (IQE)
• Escuela de Voluntarios de CELPE
• Atención a Comunidades Especiales (CACE)
COSERN
• Fundación estatal para la Infancia y Adolescencia
(FUNDAC)
Guatemala
EEGSA is cooperating in the ground-breaking
“Electricity Planet” [Planeta Eléctrico] exhibition at the
Guatemala’s Children’s Museum. It is also a founding
member of the Centro de Investigaciones de la Universidad
del Istmo.
It has carried out an electricity risk campaign for builders,
has donated office and computer equipment to several
teaching institutions and has launched an energy saving
communications campaign.
Bolivia
ELECTROPAZ continues its cooperation with the
Fundación cultural Kipus for the visit of children to the
Kusillo Museum. It has also carried out different
information campaigns on electrical safety.
México
IBERDROLA-México has agreements with universities and
schools to fund scholarships for students.
SOCIAL INFORMATION
Community service actions
IBERDROLA’s goal in this Program is to help improve the
quality of life of the more underprivileged groups of
society.
IBERDROLA and its Foundation work to
improve the living conditions of the
underprivileged
Resources of almost three million euros were allocated to
this area in 2006; in Spain alone, IBERDROLA performed
more than 100 activities in this field. The following were
the most significant programs and projects:
Corporate Volunteer Program
The purpose of the Volunteerism Program is to channel
the community service spirit of IBERDROLA employees,
providing social strategies and projects in keeping with
the Company’s values which promote the voluntary
participation of its workers. Noteworthy in 2006 were:
• Volunteer Days
These are days organized jointly with entities
providing assistance to persons with disabilities, which
offer leisure activities to such groups. Five Days were
held in 2006, whose main characteristics are shown
in table 70.
TABLE 70
Day
Date
Cáceres
3 Jun.
Toledo
30 Sep.
Madrid
7 Oct.
Bilbao
21 Oct.
Murcia
2 Dec.
Total participants
IBERDROLA(*)
Volunteers
30
40
80
40
50
240
Number of
Attendees(*)
300
300
290
150
200
1,240
• Company and Volunteerism Project
IBERDROLA participates in the Company and
Volunteerism [Empresa y Voluntariado] Project
promoted by the Fundación Empresa y Sociedad. This is
three-year a multi-company work plan. Its purpose is
to support the social and economic development of
the communities served by affiliated companies,
through the employment of underprivileged persons
and projects relating to basic infrastructure that allow
their technicians to participate actively. The goal of the
Project is to foster professional volunteerism within
affiliated companies, with the growing involvement of
its employees.
• 2006 Christmas Projects Contest
IBERDROLA has selected three social assistance NGO’s
to which it contributed over 90,000 euros, in addition
to encouraging voluntary gifts from its workers.
Employees voted for the NGO with which they
identified the most, and the funds were distributed
accordingly. 1,116 employees participated through the
Employee Portal, with the following result: Tierra de
Hombres, Aldeas Infantiles and Amigos de los Mayores.
Support for social institutions and activities
IBERDROLA regularly cooperates with various foundations
and entities. In Spain, the following deserve mention in
2006: Fundación Empresa y Sociedad, Fundación +Familia,
Fundación Energía sin Fronteras, the Red Cross, …. It also
continues to increase its aid to regional associations
providing assistance to persons with disabilities, among
which the large number of initiatives supported in
Castilla-La Mancha is particularly noteworthy. It also
cooperates with many initiatives that provide aid to the
underprivileged, promoted by different organizations.
Latin America
IBERDROLA’s affiliated companies in Latin America have
been carrying out extensive social activities in their
respective communities. The following were the most
noteworthy activities in 2006:
(*) estimated
25 organizations providing assistance to persons with
disabilities in Extremadura, Castilla-La Mancha, Madrid,
the Basque Country and Murcia participated in these
Days. Such organizations also receive other support from
the Company
Brazil
COELBA, COSERN and CELPE support recognized
charitable institutions and social initiatives working to
improve the quality of life of the most underprivileged
sectors of the population. Some of them are: Obras
Sociales Irma Dulce, Instituto de Ciegos de Bahía, Casa del
Menor Trabajador, Liga de Río Grande del Norte contra el
Cáncer, ….
177
The three Brazilian companies participate in the Social
Responsibility Program of Grupo Neoenergía, known as
“Energy to Grow” [“Energía para Crecer”], in order to
structure their social actions more effectively.
Support for environmental entities and initiatives
IBERDROLA cooperates with public and private
environmental protection institutions. The following
actions were the most worthy of note:
Guatemala
EEGSA applies a “Social Rate” [Tarifa Social] which consists
of a lower cost for the first 100 kWh of consumption for
customers using less than 300 kWh a month.
Rey Jaime I awards
IBERDROLA participates in the Rey Jaime I awards created
at the initiative of the Fundación Valenciana de Estudios
Avanzados, under the patronage of H.M. the King.
In addition, EEGSA has launched a Corporate Volunteer
Program.
Bolivia
ELECTROPAZ and ELFEO apply the so-called “Dignity Rate”
[“Tarifa Dignidad”], which entails a 25% reduction for
household customers using less than a specified
minimum amount (70 kWh in urban areas and 30 kWh in
rural areas).
Chile
ESSAL has cooperated with equipment and infrastructure
works for different educational and health care
institutions.
IBENER sponsored the purchase of Christmas presents for
economically disadvantaged children; it also carried out
various activities to support small-scale farmers damaged
by the 2006 floods.
México
IBERDROLA México has also cooperated with equipment
for health care and educational organizations.
Environment
IBERDROLA’s goal in this Program is to extend its
strategic interest in sustainability to the entities and
companies of the communities it serves, cooperating
with initiatives of interest.
IBERDROLA promotes the culture of
sustainability among the entities and
companies of the communities it serves
Overall resources of over half a million euros were
allocated to this area in 2006: in Spain alone,
IBERDROLA performed more than 20 activities in this
field. The following were the most relevant programs
and projects:
178
Their purpose is to recognize the scientific merit of
Spanish persons or research groups working mostly in
Spain. IBERDROLA has sponsored the Environmental
Protection Award since 1995.
Excellence in Sustainability Club
IBERDROLA is a founding member of the Excellence in
Sustainability Club [Club de Excelencia en Sostenibilidad],
a forum created in 2002 by a number of large companies.
Its mission is to promote sustainable development from
the corporate sector.
Other organizations and initiatives
The following table shows the other important
organizations supported by IBERDROLA.
Entities supported by IBERDROLA
• Foro Doñana para la Empresa Sostenible
• Asociación de Empresas del Sector Medioambiental de
Andalucía (AESMA)
• Agenda Local 21 con diferentes municipios
• Fundación Valenciana de Estudios Avanzados
• Fundación Naturgintza (Basque Country)
• Centro Ambiental Cristina Enea (Basque Country)
• Fundación Tormes-EB (Salamanca)
SOCIAL INFORMATION
Also worth noting is IBERDROLA’s participation in the
European ‘Ecocity’ project under the Concerto Program,
the purpose of which is to build three “ecocities”. One of
them will be in Tudela (Navarra) and will have about
700 homes.
Dissemination of sustainability
In 2006, IBERDROLA cooperated in many environmental
dissemination activities and participated in workshops,
exhibitions and similar events. The most relevant of these
were the following:
- 4th Cycle of Lectures on the environment organized
by Fundación Universitat Jaume I (Castellón) and our
Company.
- Climate Change exhibition, held in San Sebastián and
organized by the Ministry of the Environment and
other institutions.
- World Environment Day, supported by the Company
with various activities.
- Environmental Exhibition in Ciudad Universitaria de
Madrid.
Guatemala
EEGSA held its Reforestation Workshop (May.-Sep. 06),
during which period it planted 10,000 trees in the
departments where it distributes electric power. It also
created two new bird enclosures in the “La Aurora”
National Zoological Park.
México
IBERDROLA-Mexico continues to participate in the project
to rescue the Garrapatas stream (of great ecological value)
in the industrial port of Altamira. In addition, during the
construction of the Altamira V plant, various different
types of trees were planted and a number of materials
recycled.
Bolivia
ELECTROPAZ cooperated in a tree-planting project in the
city of El Alto.
Chile
ESSAL cooperated with the National Environmental
Corporation [Corporación Nacional del Medio Ambiente]
(CONAMA) and participated in the 5th Environmental Fair
of the X Region, held in Osorno.
- Sponsorship of “The earth: our home. Sustainable
consumption guide” [“La Tierra, nuestro hogar. Guía
de consumo sostenible”, ] published by Fuhem, with an
introduction by the Environment Minister.
Latin America
Affiliated companies in Latin America also carry out a
number of actions sponsoring entities or specific activities
relating to the preservation of the environment. In 2006,
most relevant of these were the following:
Brazil
COELBA has supported the Environmental Resources
Center (in its Fincas Ambientales Project), and the Núcleo
de Estudios Avanzados de Medio Ambiente (NEAMA) in its
municipal environmental management courses to train
the environmental managers of the municipalities.
COSERN cooperated in a Program for the selective
collection of waste and sponsored various seminars and
lectures on the environment at corporate fairs, schools
and other locations.
CELPE participated in the Tamar Project for the
conservation and protection of marine turtles.
179
Commitment
to innovation
IBERDROLA's Innovation Policy aims to
incorporate the latest technologies into the
productive process by making more and better
use of innovation as a discipline and as a tool
for searching out new opportunities for
improvement, to effectively contribute to the
establishment of a scientific and technological
community in the Autonomous Communities
in which the Company has a presence, and to
strengthen its advanced technology and its
care for social and environment surroundings.
IBERDROLA works to extend a culture of
innovation throughout the Company and
fosters working environments that encourage
and reward the generation of innovative ideas
and practices by employees, accepting risk and
recognizing creative contributions.
R&D&i INFORMATION
Innovation policy and strategy
Innovation at the IBERDROLA Group
INNOVATION POLICY AND STRATEGY
INNOVATION AT THE IBERDROLA GROUP
IBERDROLA’s Innovation Policy focuses on an increasingly
efficient management of available resources, while
simultaneously introducing the most appropriate
technologies at a fast pace. The Company also understands
that innovation is a key element for sustainable
development. In accordance with these principles and as
part of the commitment to innovation, activities involving
the planned investment of 200 million euros in this area
are identified in the 2007-2009 Strategic Plan.*
In 2006, IBERDROLA developed 131 R&D&i projects, 35 of
which were new initiatives. Total investment in the
Company’s innovation activities rose to 56 million euros,
which represents a 4% increase over 2005, and 1.5% over
EBITDA at the close of the fiscal year.
IBERDROLA plans to invest 200 million euros in
R&D&I during the 2007-2009 period
To reinforce this strategy, a major impetus was given to
innovation in 2006, doubling resources and implementing a
series of initiatives that include:
• The introduction of Ibermática’s Innovation Capital Model
[Modelo Capital Innovación] as a key tool that will allow for
the measurement and development of IBERDROLA’s ability
to change and to adapt to new market and environmental
conditions.
• The development of the R&D&i committees for the various
business divisions, whose main task is to manage the
innovation process from a closer perspective.
• Implementation of the IBERDROLA Innovation Network
[Red de Innovación IBERDROLA] project, as the forum in
which intense technological monitoring, project
promotion, and knowledge exchanges will take place.
• The launch of the certification process for the R&D&i
management system, pursuant to the UNE 166.000 set of
standards.
• The application of the Innovation Reference Framework
[Marco de Referencia de la Innovación] within a pilot
project in which companies such as Siemens, IBM and
3M have participated.
• The identification of 15 knowledge areas, headed by
IBERDROLA’s specialized technicians, that form the
basis of the Company’s knowledge management system.
CHART 69
Growth of the IBERDROLA Group’s R&D&i investments
in 2006
(E millions)
56
+4%
54
2005
2006
*Research, development and innovation
During this fiscal year, a new procedure was also developed
for the accounting treatment of R&D&i projects, increasing
the corresponding corporate income-tax deductions by up to
3.3 million euros (for 19 projects certified by the Ministry of
Industry, with a total investment of 13.8 million euros).
The IBERDROLA Group applied for three patents in 2006,
two relating to a new device for the hydrogenation of
metallic zirconium casings in boiling-water nuclear
reactors, and a third relating to an active electronic
grounding system for a distribution network.
The IBERDROLA Group has invested 56 million
euros in more than 130 R&D&i projects
During this fiscal year, the Company represented Spain on
four of the Study Committees of the International Council
on Large Electric Systems [Consejo Internacional de
Grandes Redes Eléctricas Mundiales] (CIGRE) and
* See the notices at the beginning of this 2006 Sustainability Report for information about the 2007-2009 Strategic Plan.
181
participated in seven working groups, which collaboration
was one of the most significant in Spain. The Company
also received an award from the Electric Power Research
Institute [Instituto de Investigación de Sistemas Eléctricos]
(EPRI) in the technology-transfer category, for a project on
global maintenance of combined-cycle gas turbines.
• The DOMINA system as the operations manager for
renewable energy facilities, as deployed during 2006
to a total of 61 wind farms and four mini-hydroelectric
power stations.
According to the Center for Industrial Technological
Development [Centro para el Desarrollo Tecnológico
Industrial] (CDTI), IBERDROLA is the domestic electrical
power company and the ninth out of 50 Spanish
companies obtaining the highest return (in its case,
4.8 million euros) on participation in the European Union’s
Sixth Framework Program on Research, Technological
Development and Demonstration.
Along these lines, IBERDROLA heads the CONLINE project
(part of the CENIT Program), contemplating an investment
of 35.6 million euros over the next four years. The
project’s goal is the creation, design and development of a
scientific and technological platform upon which realtime predictive management tools for energy systems can
be structured and built.
As to participation in major innovation projects, during
2006 the Company took part in 16 European projects and
headed three of the large integrated energy-systems projects
(involving PLC technology and distributed networks). The
Company also presented two consortia to the CENIT
program on active demand management and predictive
maintenance, for a total investment of 62.5 million euros.
New investments
IBERDROLA participates actively in the European
SMARTGRIDS platform, as the sole Spanish representative
on the advisory committee, the purpose of which is to
define the electrical power grids of the future. The
Company is also leading this line of research in Europe,
with the following projects:
IBERDROLA is the domestic power company
with the highest return (almost 5 million euros)
on its participation in the Sixth Framework
Research Program
Efficiency program
Some of the most notable projects completed during
2006 to improve operations at the Company’s facilities
are listed below:
• The design and development of a model for the early
detection of anomalies at the monitoring centers of
combined cycle plants.
• The development of a new architecture for control
systems, offering integrated management of the
distribution network.
• Excellent integration of renewable energies, primarily
wind farms, in the existing transmission and distribution
networks (the European WINDGRID Project).
• The use of traditional technologies for managing
electrical-power production in wind operations,
including the tracking of energy that has not been
produced.
182
• Control and regulation of the reactive capacity
contributed to the grid by the wind farms.
• The FENIX integrated project for the design of future
flexible networks with integrated distributedgeneration technologies, and their integration into
plants with large-scale virtual capacity under
decentralized control.
• The EU-DEEP project, which analyzes the large-scale
implementation of distributed generation through
demand-side activities enabling the optimal prediction
and handling thereof.
• The creation of new products, equipment and systems
that enable the development of low-voltage
micronetworks that are intelligently and
autonomously integrated into the distribution
networks (the MICRORRED project).
Along these lines, IBERDROLA also headed the GAD
project (part of the CENIT Program), contemplating an
investment of 26.9 million euros. The goal of this project
is to optimize the consumption of electrical energy and
therefore the cost associated with meeting demand,
while at the same time meeting users’ needs with the
same quality.
The following other projects were also completed during
2006 as part of the new investment program:
R&D&i INFORMATION
• The launch of a pilot project for a thermoelectric solar
power plant, with parabolic cylinder collectors and
direct steam generation.
• The development of technologies for thermoelectric
solar power plants, through the hybridization of a
solar field with a combined cycle plant and the
optimization of the design of a parabolic cylinder
collector.
• The development of a solar tracker with improved
operational reliability.
• The OLASLUZ project, which seeks to convert sea-wave
energy into electrical power, based on the results of an
experiment with a1.4 MW pilot plant.
• The establishment of an integrated system for
protecting and monitoring electric power substations,
in compliance with the IEC 61850 standard.
• Tests with high-temperature, low-sag conductors in
high-voltage lines.
Customer program
IBERDROLA’s commitment to its customers is backed by
the Company’s innovation activities, which are aimed at
designing and managing new services, as well as
improving the quality of the energy supply.
The major activities of the program are:
• The search for, and creation of, new initiatives to serve
and become acquainted with customers, and the
development of new commercial systems and
processes.
• New forms of market contracting, based on term
contracting and data assurance.
• Management and planning of new products supplied
to customers, and electronic billing, with 300,000
customers already using this system.
• The second phase of the European OPERA project,
intended to strengthen the standardization of PLC
(Power Line Communication) technology, in order to
develop a new family of services and products.
Environmental program
In order to enhance the efficiency of its interaction with
the environment, IBERDROLA has taken action to reduce
emissions through two key initiatives: the INQUEMADOS
[“Pollutants”] project (for the reduction of pollutants at
coal-fired thermal plants through the use of combustionoptimization techniques, with the joint application of
modified and extended air and carbon inputs) and the
BIOVEL project, the goal of which is to determine the
feasibility of autochthonous biomass co-combustion in
the Velilla del Río Carrión thermal power plant.
Other projects included in this program are:
• The European ECO-CITY project, which establishes a
technological basis for the construction of eco-cities in
three towns in Sweden/Denmark, Norway and Spain
(Tudela).
• The design of perch-discouraging crosspieces and low
environmental-impact structural elements for the
external nesting of storks, for use on medium- and
high-voltage power lines.
• The industrial implementation of a treatment plant for
low- and medium-activity radioactive wastes, using
plasma-based technologies.
Community surroundings program
The most notable activities of the IBERDROLA Group
during 2006 associated with the environment/community
surroundings are listed below:
- The Raya Duero project, in association with several
participating municipalities near Salamanca, have
created a network of Local Development Cooperation
Centers [Centros de Cooperación para el Desarrollo
Local] (CODEL), intended to serve local residents and
to support cultural, socioeconomic, and joint
initiatives with other towns in the area.
- The R&D&i Program, with the participation of
The Spanish Challenge [El Desafío Español], the goal of
which is to spread the technology developed for this
racing yacht to other Spanish companies in the
recreational sailing field, and to create a stable
innovative technological network.
- Through its IBERDROLA Ingeniería subsidiary,
the Company heads two consortia of companies that
are developing the detailed engineering aspects of
the mechanical and electrical parts of the ITER
reactor being built in Cadarache (France), and is
collaborating with the European Organization for
Nuclear Research (CERN) in a program to exchange
technological knowledge about the world’s largest
particle accelerator.
183
Commitment
to excellence
In order to achieve business excellence in
its management, IBERDROLA is making an
effort to familiarize itself with the
expectations of its stakeholders,
encourage innovation and development,
and promote a culture of continuous
improvement in the management of all of
the Company’s processes, systems and
activities.
Our management system includes the
implementation of the best international
quality standards and the certification of
major processes and systems, which leads
to an improvement in IBERDROLA’s
competitiveness and a contribution to the
creation of value and to the profitable
growth of the Company.
QUALITY INFORMATION
Quality Policy
Quality Management
Quality in Supplies
QUALITY POLICY
IBERDROLA understands that the creation of value for
shareholders, users, employees, and society in general
must be achieved through outstanding management of all
processes and resources.
This model of value creation is supported by sustainable
and profitable growth, characterized by strict compliance
with the legislation in force, as well as by the other
commitments that the Company has made.
IBERDROLA understands quality to be: the integration of
activities in order to satisfy our customers’ expectations;
respect for the environment; and the prevention of
occupational risks, thus attaining business excellence in
the management of these areas.
This proposition is based on the following principles:
Expand all of our activities, while establishing the safety
of our employees as an essential requirement.
Know the expectations of our customers, both internal
and external, as a necessary condition for meeting their
demands and keeping their loyalty.
Establish a culture of risk prevention, which allows us to
manage environmental impacts and operating risks in a
manner compatible with our surroundings.
Publicize our Quality Policy, in order to boost the
Company’s image and foster communication with the
community.
Improve indicators for growth, profitability, leadership,
quality, environmental impact, safety and costs for the
Company.
Provide information in a transparent manner regarding
both business results and the Company’s other activities.
QUALITY MANAGEMENT
IBERDROLA is aware that improved management quality
translates into improved competitiveness. During 2006,
quality standards were implemented and certified for new
procedures, and the scope of other, previously-certified
procedures was expanded, for a current total of more than
fifty certifications (specifically, 59 certifications; the full list
appears on IBERDROLA’s website,
http://www.iberdrola.es/wcorp/corporativa/iberdrola?IDPAG ),
for a 23% increase over the certifications recorded in 2005.
Encourage innovation and development in order to satisfy
and even exceed the expectations of our customers and
employees.
CHART 70
Total certifications in 2006
Promote a culture of continuous improvement in the
management of all of the Company's procedures and
activities.
(no.)
59
Increase the motivation of our employees through
informational transparency, internal communication,
training and continuous advancement.
+23%
48
Acknowledge lindividual achievements and encourage
teamwork as a model of behavior at all organizational
levels.
2005
2006
185
IBERDROLA has obtained 59 certifications, 23%
more than the number recorded in 2005
The Company’s principal quality management activities
in Spain and Latin America in 2006 are described
below:
Quality management activities in Spain
Notable among the quality certifications is the
management quality system certification, pursuant to
the ISO 9001 standard, for the process for measuring
and controlling the continuity of energy supply. This
key process for IBERDROLA’s customers captures and
processes supply-continuity data in order to calculate
the ICEIT (Installed Capacity Equivalent Interrupt Time
at medium voltage) and NIEPI (Installed Capacity
Equivalent Number of Interruptions at medium voltage)
indices, in accordance with the provisions of ECO
Directive No. 797/2002. The recipients of this data are
the Ministry of Industry, Tourism, and Trade (for the
local indices) and the end user (for the individual
indices on which billing discounts are based).
The Pasajes thermal power plant has also certified its
quality management system for the operation,
maintenance, and usage management processes. Other
areas have also broadened the scope of their certified
quality management systems: the hydroelectric production
area, for its dam operation process; IBERDROLA Operación
y Mantenimiento, for its activities at the Aceca and Arcos
de la Frontera combined cycle plants; the Velilla del Río
Carrión thermal power plant, for operations, maintenance
and usage management; the business area, for its handling
of complaints, claims and procedural requests; and the
risks area, for its monitoring of backtesting, policies, and
limits.
Along with the new processes and expanded scopes, the
various areas with certified processes have worked hard
toward the continuous improvement of their quality
management systems, performing the respective followup audits and certification renewals.
In connection with environmental certifications,
IBERDROLA has certified the Company’s overall
environmental management system in compliance with
the ISO 14001 standard for the generation, distribution
and supply of electric power; and for the transmission,
distribution and supply of gas and other products and
186
services related to the supply and consumption of
energy in Spain (for further information please see the
environmental information). As a result, the Company
now holds an ISO 14001 certification for all of its
generation facilities, including the renewable energy
facilities, the distribution facilities, and our corporate
buildings.
The Velilla del Río Carrión thermal power plant and the
Castejón combined cycle plant have joined the
European Eco-Management and Audit Scheme (EMAS).
Moreover, the Company’s hydroelectric production area
and IBERDROLA Operación y Mantenimiento (IOMSA)
have extended their scope to include the environmental
management system for dam operations and the
activities at Aceca and Arcos de la Frontera combined
cycle plants.
IBERDROLA now holds an ISO 14001 certification
for all of its generation and distribution facilities,
and for its corporate buildings
IOMSA has also extended its scope to include the
prevention of occupational risks, under the OHSAS
18001 standard, for activities at Aceca and Arcos de la
Frontera combined cycle plants.
Quality management activities in Latin America
During 2006, the companies managed by the
IBERDROLA Group in Latin America have made
significant efforts to obtain new certifications and
create new quality committees.
Notable in Mexico is the new quality certification under
the ISO 9001 standard for the Monterrey combined
cycle plant, as is the environmental certification under
the ISO 14001 standard for the Altamira III and IV
combined cycle plants.
In Brazil, IBERDROLA obtained certificates during the
year under the ISO 9001 standard for all of the
Company’s administrative and media management
processes (human resources, management, information
technologies, finance, accounting, and corporate
communications), as well as the triple certification
(quality, environment and safety) for the activities of the
Termopernambuco combined cycle plant.
QUALITY INFORMATION
IBERDROLA’s companies in Latin America have
made significant efforts to obtain new
certifications and create new quality
committees
Other improvement projects
In 2006, IBERDROLA developed other management
improvement projects. Some notable projects are the
“Dialogue with social interest groups” [“Diálogo con
grupos de interés sociales”] (interviews with
environmental, consumer and social organizations),
through which benchmarking was performed for the
best existing practices in this area, and the
Administrative Inspection Group [Grupo Administrativo
de Inspección] (GRAI), which has performed a total
164,137 inspections allowing the Company to recover
190.4 GWh as of the close of the fiscal year.
The Mobility Project [Proyecto Movilidad] optimized
warehouse management, and the Non-Conformity
Originator [Originador de No Conformidades] (ORINOCO)
improved the management of quality and
environmental issues. IBERDROLA also received the
EPRI Technology Transfer Award, granted because of its
joint effort with the nuclear division toward developing
the validation of inspections for the Spanish nuclear
sector.
Presentation of the 2006 IBERDROLA Supplier of the Year Award
(Toledo)
Management System, Risk Prevention, Social
Responsibility and International.
In 2006, Supplier of the Year Awards in various
categories were given to Mesa-Schneid, Inael,
Babcock, Securitas Systems, Monrasa, Befesa,
Lainsa, and the Mexican company Conelec
QUALITY IN SUPPLIES
IBERDROLA has advanced another year toward a
comprehensive quality management model providing
the Company with new certifications and recognition
for its business and processes. In this respect, the
Company has taken on commitments with regard to
sustainability that have been extended to its suppliers.
To motivate and acknowledge the work of the
Company’s suppliers, IBERDROLA issued its fifth annual
Supplier of the Year Award in 2006, which is the first
year in which Latin America suppliers participated. This
award is intended to encourage observance of the
highest standards in terms of quality, sustainable
development, the environment, and occupational safety,
which are key aspects of the companies’ corporate social
responsibility.
In the Equipment and Material Manufacturers category,
the winners were Mesa-Schneid in the large company
class, and Inael in the small and medium-size company
class, respectively. In the Works and Services category,
the co-winners in the large company class were Babcock
and Securitas Systems, with and Monrasa winning in the
small and medium-size company class.
In the Quality Management System category, the prize
went to Macpuarsa; Befesa won in the Environmental
Management System category; Lainsa was the winner in
Risk Prevention, and Monrasa won in Social
Responsibility. Finally, the Mexican company Conelec
received the prize in the International category.
At this year’s ceremony, held in Toledo, the IBERDROLA
Supplier of the Year Award was presented in nine
Categories (in contrast to six categories in 2005),
including Quality Management System, Environmental
187
EXHIBITS
Key features of the Sustainability Report
Supplemental information
The Sustainability Report according to the AA1000 standard and the GRI Guide
Independent external verification report
KEY FEATURES OF THE SUSTAINABILITY REPORT
The IBERDROLA Group owns or holds an interest in
approximately 200 companies that operate in a variety
of activities and geographical areas. The itemized
information on the companies within the Group appears
in the “Supplemental Information” exhibit.
In preparing its public information, IBERDROLA adhered
to the standards described below, which were taken into
consideration along with the recommendations
published by the Global Reporting Initiative in the
January 2005 “GRI Boundary Protocol”.
• The principles and policies adopted and made public
by the IBERDROLA Group, as well as the business
strategies designed to move toward sustainable
development, apply to all of the companies in the
Group over which IBERDROLA has control or
exercises significant influence.
The table on this page lists the companies within the
IBERDROLA Group that make up the three types of
information (economic, environmental, and social). More
detailed information appears in the “Supplemental
Information” exhibit.
The environmental and social information was
consolidated by applying to the figures for each
company the direct or indirect percentage interest held
by IBERDROLA in that company, as shown in the list of
the IBERDROLA Group’s subsidiaries and affiliates in the
“Supplemental Information” exhibit.
Sustainability information
Economic aspect
(all Companies of the IBERDROLA Group)
Environmenta
aspectl
• In terms of financial performance, the information
available corresponds to one hundred percent of the
companies in the Group, and was processed in
compliance with the legislation currently in force. The
results appear in the document entitled “2006 Legal
Information”. The financial information appearing in
the 2006 Sustainability Report is derived from the
above-mentioned document.
• Affiliate nuclear power plants
(Ascó, Vandellós, Trillo, Almaráz, Nuclenor)
• Tarragona Power, S.L., Bahía de Bizkaia Electricidad, S.L. and the
subsidiaries of IBERDROLA Cogeneración S.L.
• Termopernambuco and Itapebí plants in Brazil
• Energyworks Brasil, Ltda. and Capuava Energy, Ltda.
• IBERDROLA, S.A.
Social
aspect
• IBERDROLA Generación, S.A.
• IBERDROLA Distribución, S.A.
• IBERDROLA Cogeneración, S.L.
• In terms of environmental and social performance, the
IBERDROLA Group’s data-processing systems do not
currently record quantitative data for all of the Group’s
subsidiaries and affiliates. However, the information
offered herein corresponds to those companies that
have a notable environmental or social impact, such
that the information appearing in the 2006
Sustainability Report reflects, in a reasonable and
balanced manner, the environmental and social
performance of the IBERDROLA Group. In the future,
other affiliates may be included in the information,
provided that this information is considered relevant
in terms of understanding the activities of the
IBERDROLA Group.
• IBERDROLA Ingeniería y Construcción, S.A.
• IBERENOVA II, S.A.
• IBERDROLA Operación y Mantenimiento, S.A.
• IBERDROLA Inmobiliaria, S.A.
• IBERDROLA México
• Companhía de Electricidade do Estado da Bahía, S.A. Brasil (COELBA)
• Companhia Energética Do Rio Grande Do Norte, S.A. Brasil (COSERN)
• Companhia de Electricidade do Pernambuco, S.A. Brasil (CELPE)
• Empresa Eléctrica de Guatemala, S.A. (EEGSA)
• Transportista Eléctrica Centroamericana, S.A. Guatemala (TRELEC)
• Electricidad de la Paz, S.A. Bolívia (ELECTROPAZ)
• Empresa de Luz y Fuerza Eléctrica de Oruro, S.A. Bolívia (ELFEO)
• Iberoamericana de Energía, S.A. Chile (IBENER)
• Empresa de Servicios Sanitarios de Los Lagos, S.A. Chile, (ESSAL)
• The Group’s other companies
189
For the Latin American companies listed in the
following table, the information about human resources
and about environmental and social matters has been
consolidated in accordance with the figures indicated in
the table.
The difference between the total equity interests and
the percentage included represents the extent of the
minority shareholders’ equity interests in the companies
consolidated by the IBERDROLA Group.
In addition, in order to consolidate the environmental
performance data for the affiliated nuclear power
plants, IBERDROLA’s production percentage was used
for each of them: Vandellos (28%); Garoña (50%);
Almaraz (52.69%); Trillo (49%), and Ascó (15%).
Likewise, the cogeneration companies that are
subsidiaries of IBERDROLA Cogeneración S.L., in which
a 99% interest is held, consolidated their environmental
information by applying a percentage of 100%.
Specifically with respect to emissions, the calculation of
CO2 emissions in Spain was based on a monthly analysis
of a representative sample by an accredited laboratory,
and of the fuel consumption recorded in the dataprocessing application of the Generation Business
(HISVAR), applying a humidity percentage and an
oxidation factor. This calculation was formalized and
approved by the Ministry of the Environment, and the
C02 emissions were verified by AENOR.
For CO2 transportation emissions, the internationally
accepted conversion factors were taken into account,
depending on the various means of transportation:
(rail, air, and road). An opacimeter was used for
particulate measurements, and an inline analyzer was
used for SO2 and NOx measurements, taking daily
concentration figures.
To consolidate financial data in the economic- and
social-information area, the exchange rates shown in
the table on the next page were applied, using the
average exchange rate for activities conducted
throughout the year and the year-end exchange rate for
the parameters evaluated at the end of the fiscal year.
Equity interests and percentage inclusion of Latin American companies (social aspect)
Total equity
interests held by
IBERDROLA
Inclusion in
other
environmental
and social
information
(%)
IBERDROLA-México
99.99
G
100.00
99.99
COELBA
42.76
P
44.19
44.19
COSERN
39.95
P
43.28
43.28
CELPE
34.96
P
39.00
39.00
IBENER
94.74
G
100.00
94.74
ESSAL
50.90
E
0.00
50.90
ELECTROPAZ
56.77
E
0.00
56.77
ELFEO
58.85
E
0.00
58.85
EEGSA
39.63
P
49.00
49.00
P
49.00
49.00
TRELEC
Consolidation method:
190
Consolidation
method
(%)
Inclusion in
information under
the “Human
Resources”
heading
(%)
39.63
G: Overall share
P: Proportional share
E: Equivalent
KEY FEATURES OF THE SUSTAINABILITY REPORT
Exchange rates used in the Sustainability Report
Exchange rate
fiscal year-end
1 euro =
2004
2005
1 euro =
1 euro =
2006
U.S.
dollar
1.362101
1.1797
1.317
Brazil
real
3.614467
2.761325
2.814697
Exchange rate
fiscal year-end
1 euro =
2004
2005
1 euro =
2006
1 euro =
U.S.
dollar
1.243945
1.244205
1.256386
Brazil
real
3.639858
3.028917
2.733495
Bolivian
10.97852
9.437613
10.60185
Bolivian
9.872253
10.02858
10.04802
In comparison with previous reports, and specifically
with respect to the information disclosed by IBERDROLA
in its 2005 Sustainability Report, there have been no
major changes in the size, structure, or ownership of
IBERDROLA or in the products and services sold; nor
have there been any changes in the bases, standards of
preparation, or calculation methods utilized. There have
been minor changes in the consolidation area and in the
consolidation method for the subsidiaries and affiliates,
which do not affect the comparability of the information
presented and which, in any event, are itemized in the
document entitled “2006 Legal Information”. During the
2006 fiscal year, these changes included the sale of
AZERTIA and LANDATA, with the resulting effect on the
workforce, as described under the “Human Resources”
heading.
Neither have there been any changes in the standards
and/or definitions used in acocunting for economic,
environmental, and social costs and benefits, or in the
calculation methods applied to the key information
under any of the three aspects mentioned above; thus,
the course of the reported aspects can be compared over
time.
Due to the continuous improvements that IBERDROLA is
makings in its environmental and social information
systems, there may be some discrepancies in comparison
with the information published in previous fiscal years,
over which the information included in this 2006
Sustainability Report prevails.
Chilean
peso
757.5758
604.9607
694.927
Chilean
peso
758.1501
695.8942
666.4915
Quetzal
10.57675
8.971667
10.10139
Quetzal
9.894818
9.507963
9.554384
Mexican
peso
15.19711
12.58986
14.29604
Mexican
peso
14.04475
13.55252
13.70011
Transparency, clarity, and relevance are attributes that
the IBERDROLA Group applies to its activities and to the
public disclosure of their outcomes.
IBERDROLA’s quality policy has confirmed the foregoing
statement, and the “Quality Information” heading
contains a detailed description of the advances made in
terms of the expanding certification of many of the
Company’s procedures.
IBERDROLA also obtains an independent external
verification of its annual information. The consolidated
annual financial statements for fiscal year 2006, as well
as the 2006 Sustainability Report, were verified by an
independent external auditor. For this verification,
IBERDROLA retained the services of two different audit
firms, which allows for greater independence between
the two activities.
Información Complementaria
Características del Informe de Sostenibilidad
Índice de contenidos según Global Reporting Initiative
(GRI)
Datos estadísticos sobre indicadores de sostenibilidad
Certificado de verificación externa
191
SUPPLEMENTAL INFORMATION
Evolución
Income statements, comparative balance sheets and ratios
The income statement has been prepared following the analytical income statement model established in the general
chart of accounts [plan general de contabilidad] as optional additional information. The figures relating to prior fiscal years
are included in the income statement of IBERDROLA and its subsidiaries (consolidated), which form a part of the annual
financial statements for those fiscal years.
Income Statement (*)
Percentage of sales and services
Items
E millions
2006
of Sales
2005
of Sales
2004
of Sales
2003
of Sales
2002
of Sales
Net sales and services
11,426
100.0%
12,235
100.0%
9,067
100.0%
9,818
100.0%
9,864
100.0%
= PRODUCTION VALUE
11,426
100.0%
12,235
100.0%
9,067
100.0%
9,818
100.0%
9,864
100.0%
(-) Consumption
(5,217)
-45.66%
(6,792)
-55.51%
(4,252)
-46.90%
(5,481)
-55.83%
(5,901)
-59.82%
(-) External and operating expenses
(1,145)
-10.02%
(1,086)
-8.88%
(943)
-10.40%
(937)
-9.54%
(790)
-8.01%
5,064
44.32%
4,357
35.61%
3,872
42.70%
3,400
34.63%
3,173
32.17%
(1,174)
-10.27%
(980)
-8.01%
(960)
-10.59%
(772)
-7.86%
(762)
-7.73%
= VALUE ADDED OF THE COMPANY
(-) Personnel expenses
GROSS OPERATING INCOME
(-) Depreciation and amortization expenses
= NET OPERATING INCOME
3,890
34.05%
3,377
27.80%
2,912
32.12%
2,628
26.77%
2,411
24.44%
(1,235)
-10.81%
(1,115)
-9.11%
(923)
-10.18%
(804)
-8.19%
(846)
-8.58%
2,655
23.24%
2,262
18.49%
1,989
21.94%
1,824
18.58%
1,565
15.87%
(+) Financial revenues
368
3.22%
267
2.18%
260
2.87%
219
2.23%
206
2.09%
(-) Financial expenses
(887)
-5.76%
(722)
-5.90%
(655)
-7.22%
(668)
-6.80%
(789)
-8.00%
69
0.60%
34
0.28%
43
0.47%
100
1.02%
44
0.45%
(+/-) Results from companies carried by the equity
the equity method
(-) Financial depreciation and amortization expenses
= INCOME FROM ORDINARY ACTIVITIES
0
0.00%
0
0.00%
0
0.00%
-10
-0.10%
-2
-0.02%
2,205
19.30%
1,841
15.05%
1,637
18.05%
1,475
15.02%
1,020
10.34%
(+) Gains on disposal of non-curren assets
193
1.69%
158
1.29%
117
1.29%
351
3.58%
766
7.77%
(-) Losses on disposal of non-current assets
(12)
-0.11%
(41)
-0.34%
(28)
-0.31%
(540)
-5.5%
(510)
-5.17%
0
0.00%
0
0.00%
0
0.00%
-10
0.10%
-2
0.02%
= PROFIT BEFORE TAXES
2,386
20.88%
1,958
16.00%
1,728
19.06%
1,275
12.99%
1,273
12.91%
(-) Corporate income tax
(695)
-6.08%
(553)
-4.52%
(521)
-5.75%
(207)
-2.11%
(304)
-3.08%
1,691
14.80%
1,405
11.48%
1,208
13.32%
1,068
10.88%
969
9.82%
(31)
-0.27%
(23)
-0.19%
(12)
-0.13%
(8)
-0.08%
(6)
-0.06%
1,660
14.53%
1,382
11.30%
1,196
13.19%
1,060
10.80%
963
9.76%
(-) Variation in allowances for intangible assets, tangible
fixed assets and long-term investments
PROFIT AFTER TAXES
( GAIN OR LOSS )
(-) Minority interests
PROFIT ATTRIBUTED TO THE COMPANY
(*) FY 2006, 2005, and 2004 amounts have been calculated applying International Financial Reporting Standards (IFRS), while those for FY 2003 and 2002 are
calculated applying the General Chart of Accounts [Plan General de Contabilidad].
192
IBERDROLA Group. Balance sheet (*)
December
December
E millions
December
2006
2005
2004
900.1
848.6
565.4
55.6
55,650.0
17.4
844.5
798.6
548.0
FIXED ASSETS
NON-CURRENT ASSETS
Intangible assets
Goodwill
Other intangible assets
Investment property
498.5
550.5
341.6
21,067.4
19,942.3
18,179.7
19,362.3
17,664.2
15,288.2
1,705.1
2,278.0
2,891.5
2,723.9
1,630.4
1,572.4
761.4
475.8
527.5
1,603.4
914.0
749.4
279.2
165.5
229.5
Property, plant and equipment in operation
Property, plant and equipment under construction
Non-current financial investments
Equity interests consolidated by the equity method
Non-current equity instruments
Other non-current financial investments
Derivative financial instruments
79.9
75.1
65.9
832.8
1,468.5
153.3
1,221.9
1,356.5
1,284.5
27,244.6
25,796.8
22,096.9
237.9
211.7
240.1
Inventories
1,192.7
848.3
1,030.6
Trade receivables and other current accounts receivable
2,790.5
2,324.3
1,949.2
Non-current trade and other receivables
Deferred tax assets
CURRENT ASSETS
Nuclear fuel
Current financial investments
288.9
669.2
349.3
Current equity instruments
147.2
3.5
14.9
Other current financial investments
123.3
650.9
314.5
18.4
14.8
19.9
Deposits with public authorities
601.6
419.9
388.6
Cash and other cash equivalents
704.6
208.4
134.1
5,816.2
4,681.9
4,091.9
33,060.8
30,478.7
26,188.8
TOTAL ASSETS
(*) FY 2006, 2005, and 2004 amounts have been calculated applying International Financial Reporting Standards (IFRS), while those for FY 2003 and 2002 are calculated
applying the General Chart of Accounts [Plan General de Contabilidad].
193
E millions
December
December
December
2006
2005
2004
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Of the parent company
Capital stock
Reserve for unrealized assets and liabilities
10,418.2
9,267.7
8,426.5
2,704.6
2,704.6
2,704.6
739.1
153.5
(18.8)
Other reserves
5,361.8
4,876.8
4,620.2
Treasury stock
-3.2
-2.4
-4.0
-44.3
153.2
-71.1
Net results for the period
1,660.2
1,382.0
1,195.6
Of minority shareholders
148.8
147.0
93.4
10,567.0
9,414.7
8,519.9
Translation difference
NON-CURRENT LIABILITIES
Deferred income
817.6
675.6
468.2
1,717.8
1,379.2
1,165.9
Allowances for pensions and similar obligations
825.9
732.5
592.2
Other allowances
891.9
646.7
573.8
Allowances
Financial debt
12,618.1
11,555.6
8,587.3
Financial debt
12,575.1
11,390.2
8,365.3
43.0
165.4
222.0
278.3
238.2
303.0
Other non-current accounts payable
Deferred tax liabilities
605.3
719.7
597.2
16,037.1
14,568.4
11,121.7
466.0
416.8
106.1
CURRENT LIABILITIES
Allowances
Allowances for pensions and similar obligations
118.5
182.9
51.8
Other allowances
347.5
233.9
54.3
Financial debt
1,734.1
1,555.4
2,517.5
Financial debt
1,665.4
1,544.8
2,476.8
Trade and other payables
Trade payables
68.7
10.6
40.7
4,256.6
4,523.3
3,923.6
2,687.8
2,919.6
1,823.9
Current tax liabilities and other payables to
public authorities
Other current liabilities
TOTAL NET SHAREHOLDERS' EQUITY AND LIABILITIES
635.0
575
543.6
933.8
1,028.0
1,556.1
6,456.7
6,495.6
6,547.3
33,060.8
30,478.7
26,188.8
(*) FY 2006, 2005, and 2004 amounts have been calculated applying International Financial Reporting Standards (IFRS), while those for FY 2003 and 2002 are calculated
applying the General Chart of Accounts [Plan General de Contabilidad].
194
E millions
2003
2002
ASSETS
Startup expenses
Fixed assets
Intangible assets
27.9
66,9
18,921.2
19,117.7
611.0
544.7
16,981.9
15,216.8
26,589.6
24,068.0
2,123.1
2,146.9
1,095.4
1,030.7
120.4
201.0
(12,938.3)
(11,838.2)
Electricity plant
facilities
Electricity plant
facilities in progress
Other tangible fixed assets
Advances and other construction in progress
Depreciation of electricity plant
facilities
Depreciation of other assets
0.0
(382.8)
(7.7)
(8.9)
2,276.3
3,345.1
16.7
11.1
Goodwill
289.3
463.4
Deferred charges
174.5
79.2
4,241.3
3,904.6
888.7
768.3
Allowances
Long-term investments
Treasury stock
Current assets
Inventories
Trade receivables
1,475.3
1,376.4
Other current assets
1,877.3
1,759.9
24,619.0
23,631.8
TOTAL ASSETS
LIABILITIES
8,225.4
8,045.4
Merger differences
243.1
249.8
Deferred revenues
412.1
337.9
1,014.1
698.0
Shareholders' equity
Provisions for contingencies and expenses
Long-term debt
676.7
729.5
10,728.3
10,976.9
Current liabilities
3,216.0
2,483.7
Minority interests
80.9
80.6
Financial debt
Consolidation difference
TOTAL LIABILITIES
22.4
30.1
24,619.0
23,631.8
(*) FY 2006, 2005, and 2004 amounts have been calculated applying International Financial Reporting Standards (IFRS), while those for FY 2003 and 2002 were
calculated applying the General Chart of Accounts [Plan General de Contabilidad].
195
IBERDROLA Group. Main economic/financial figures
E millions
2006
2,705
10,418
14,352
36,094
(15,266)
1,057
11,017
1,660
Capital stock
Equity in the parent company
Financial debt
Gross fixed assets in use
Accumulated deprec. and amort.
Annual deprec. and amort.
Revenue
Net income
2005
2,705
9,268
13,111
33,448
(14,363)
984
11,738
1,382
2004
2,705
8,427
11,105
29,578
(13,383)
896
8,725
1,196
2003
2,705
8,225
10,728
28,296
(12,938)
789
9,452
1,060
2002
2,705
8,045
11,427
25,643
(12,221)
793
9,578
963
IBERDROLA Group. Changes in the Balance Sheet
E millions
2006
2005
2004
2003
2002
10,567.0
10,418.2
148.8
14,352.2
12,575.2
43.0
1,665.4
68.6
9,414.7
9,267.7
147.0
13,111.0
11,390.2
165.4
1,544.8
10.6
8,519.9
8,426.5
93.4
11,104.8
8,365.3
222.0
2,476.8
40.7
8,225.4
8,225.4
80.9
10,728.4
8,746.0
8,045.4
8,045.4
80.6
11,426.9
8,159.9
1,982.4
-
3,267.0
-
42.41%
57.59%
41.41%
58.20%
43.14%
56.59%
43.40%
56.60%
41.32%
58.68%
17.6%
16.2%
14.5%
13.2%
12.1%
Net Sales
Net profit
Net financial expenses
Gross operating income
Net profits / net sales (%)
2006
11,017
1,660
2005
11,738
1,382
2004
8,725
1,196
2003
9,452
1,060
2002
9,578
963
(519)
3,890
15.07%
(456)
3,378
11.77%
(395)
2,913
13.71%
(449)
2,627
11.21%
(583)
2,410
10.05%
Net financial expenses / gross operating income (%)
13.34%
13.49%
13.55%
17.10%
24.19%
In the parent company (2)
Of minority shareholders
Interest-bearing financial debt (1)
Financial debt – Non-current
Derivative financial instruments – Non-current
Deuda financiera - Corriente
Derivative financial instruments – Current
Permanent financial structure
Interest-bearing financial debt
Return on equity
Net income/original shareholders’ equity
(1) Total debt capitalization under GRI 2.8
(2) Total equity capitalization under GRI 2.8
IBERDROLA Group. Changes in the Income Statements
E millions
IBERDROLA Group. Changes in income, dividends and cash flow
E millions
2006
Profit before taxes (e millions)
2,386
Gross dividend
940 (1)
Cash flow (Net profit + depreciation, amortization and allowances) 2,896
2005
1,958
798
2,497
2004
1,728
692
2,118
2003
1,275
606
1,864
2002
1,273
550
1,809
(1) Proposal pending approval at the General Shareholders' Meeting. The dividend from shares issued, if any, as a result of the agreement with ScottishPower has not
been taken into consideration.
196
IBERDROLA Group. Financial Ratios
Financial solvency (multiple)
Cash flow + net financial expenses / net financial expenses
Gross operating income /
net financial expenses (multiple)
Interest-bearing debt / cash flow (multiple)
2006
2005
2004
2003
2002
6.58
6.50
6.40
5.10
4.10
7.50
5.20
7.40
5.20
7.40
5.20
5.80
5.80
4.10
6.10
2006
5,286
368
182
5,836
2005
4,580
267
117
4,964
2004
4,069
260
90
4,418
2003
3,561
219
(198)
3,581
2002
3,320
206
253
3,779
1,174
887
918
940
1,917
980
722
776
798
1,688
960
655
716
692
1,395
772
668
369
606
1,167
762
789
451
550
1,226
5,836
4,964
4,418
3,581
3,779
20.1%
15.2%
15.7%
16.1%
32.8%
100.0%
19.7%
14.6%
15.6%
16.1%
34.0%
100.0%
21.7%
14.8%
16.2%
15.7%
31.6%
100.0%
21.6%
18.7%
10.3%
16.9%
32.6%
100.0%
20.2%
20.9%
11.9%
14.6%
32.5%
100.0%
0.344
0.291
0.261
0.257
0.265
IBERDROLA Group. Changes in gross value added and distributions
G.A.V. from recurring operations (e millions)
Financial income (e millions)
Extraordinary income (e millions)
G.A.V. generated (e millions)
APPLICATION OF FUNDS
Personnel and social security benefits
Debt
Public sector
Shareholders
Company yield
Total
APPLICATION OF FUNDS
Personnel and social security benefits
Debt
Public sector
Shareholders
Company yield
Total
G.A.V. / used
Changes in operating data of the IBERDROLA Group
- Spain
- Latin America
-Spain
-Latin America
Energy distributed (GWh)
- Spain
- Latin America
Users/supply points under management (millions)
- Spain
- Latin America
IBERDROLA employees (number)
2006
95,121
71,549
23,662
30,384
25,966
4,418
127,350
99,520
27,830
18.4
9.9
8.5
16,155
2005
85,676
66,249
19,427
27,791
24,502
2,897
122,904
96,320
26,609
17.8
9.7
8.1
17,184
2004
84,373
68,422
15,951
25,237
22,547
2,690
117,115
92,207
24,908
17.4
9.6
7.8
16,525
197
INFORMATION BY COUNTRY
The Global Reporting Initiative (GRI) recommends that
certain economic information be provided according to
the geographical area in which the Company’s activities
are carried out. In order for this information to be
meaningful, IBERDROLA takes into account the following
regions: Spain, South America, Mexico-Guatemala, and
Others. The comparable historical information for these
areas is available for fiscal years 2005 and 2006, in view of
the above-mentioned change in the standards applicable
to financial information implemented in 2005.
For a detailed analysis of the consolidated financial
statements of IBERDROLA, the audited information
appears in the document entitled “2006 Legal
Information”.
Economic value generated, distributed, and withheld
E millions
Year 2006
Total
Spain
South America
Mexico/Guatemala
Others
11,620.9
9,183.7
1,001.5
1,403.1
32.6
Operating costs
6,152.6
4,677.9
404.5
1,068.7
1.5
Compensation to
employees
1,173.7
1,079.7
73.4
20.0
0.6
Payments to providers
of capital
1,759.9
1,542.2
115.2
99.7
2.8
Payments to public
authorities
831.6
721.9
54.1
44.2
11.4
Donations and other
community
investments
73.3
8.3
64.2
0.8
0
1,629.7
1,153.6
290.1
169.8
16.2
Income
Withheld economic value
Economic value generated, distributed, and withheld
E millions
Year 2005
Total
Spain
South America
Mexico/Guatemala
Others
12,327.2
10,115.9
836.1
1,331.9
43.4
7,607.5
6,213.7
342.1
1,047.5
4.2
979.8
894.7
67.3
16.2
1.7
1,451.7
1,204.0
152.0
84.4
11.3
Payments to public
authorities
776.0
718.5
15.3
36.2
6.0
Donations and other
community
investments
47.0
9.2
37.0
0.7
0
1,465.2
1,075.7
222.4
146.9
20.2
Income
Operating costs
Compensation to
employees
Payments to providers
of capital
Withheld economic value
198
Principal Facilities of the IBERDROLA Group
Principal hydroelectric power plants in Spain
Power plant
José Mª Oriol (*)
Villarino
Aldeadávila I
La Muela de Cortes
Cedillo
Aldeadávila II
Puente Bibey
Cortes II
Conso
Saucelle II
San Esteban
Saucelle I
Valdecañas
Soutelo
Azután
Ricobayo I
Ricobayo II
Torrejón
Cofrentes
Villalcampo II
Castro II
Gabriel y Galán
Other (*)
Total
(*)
Number of
units
4
6
6
3
4
2
5
2
3
2
6
4
3
2
3
4
1
4
3
1
1
1
307
377
River
Tajo
Tormes
Duero
Júcar
Tajo
Duero
Bibey
Júcar
Camba
Duero
Sil
Duero
Tajo
Cenza
Tajo
Esla
Esla
Tajo
Júcar
Duero
Duero
Alagón
---
Installed capacity
(MW)
957
857
810
635
500
433
315
282
270
269
263
251
249
215
200
175
154
132
123
119
113
111
1,411
8,842
Expansion of capacity in 2006
Combined cycle power plants in Spain
Power plant
Arcos de la Frontera
Aceca
BBE
Castellón
Castejón
Escombreras (**)
Santurce
Tarragona Power
Total
IBERDROLA
Ownership (%)
100
100
25
100
100
100
100
50
--
Number of
units
5
1
1
1
1
1
1
1
12
Installed
capacity (MW)
1,600
400
800
800
400
800
400
400
5,600
IBERDROLA
capacity (MW)
1,600
400
200
200
400
800
400
200
4,800
(**) Placed into service in 2006
199
Renewable energy facilities in Spain
Wind farm /
Number of wind IBERDROLA
complex
farms/power stations capital (%)
7
100.0%
Maranchón Complex
Higueruela Complex
5
100.0%
4
100.0%
Sisante Complex
Capiruza I
1
100.0%
1
51.0%
Morón de Almazán (**)
Urbel del Castillo (**)
1
85.0%
Badaia
1
50.0%
Cabimonteros
1
36.3%
Escurrillo
1
36.3%
Molar del Molinar
1
100.0%
Callejas
1
100.0%
Maza
1
100.0%
Gatún
1
25.0%
Masgalán-campo do coco
1
100.0%
Ameixeiras-Testeiros
1
100.0%
Tardienta I
1
100.0%
Campalbo
1
100.0%
Serra de Meira
1
100.0%
Carrasquillo
1
100.0%
Sil
1
100.0%
Muras
1
100.0%
Isabela
1
100.0%
Fuendetodos II
1
100.0%
Sierra de la Oliva
1
100.0%
Fuendetodos I
1
100.0%
100.0%
1
La Muela
100.0%
1
Alcarama II
El Portachuelo
1
25.0%
100.0%
1
Pedregal
Bordecorex Norte
1
85.0%
Tardienta II
1
60.0%
El Teruelo
1
100.0%
Capiruza II
1
100.0%
La Cabaña
1
25.0%
Goia-Peñote
1
100.0%
1
100.0%
Sierra Menera (**)
Other wind farms
73
-100.0%
Mini-hydroelectric power plants (***) 134
Total
256
-(**)
(***)
200
Placed in service in 2006.
Alarcón mini-hydroelectric plant placed in service in 2006.
Percentage
consolidation
100.0%
100.0%
100.0%
100.0%
60.0%
100.0%
50.0%
36.3%
36.3%
100.0%
100.0%
100.0%
25.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
63.6%
25.0%
100.0%
100.0%
100.0%
100.0%
100.0%
25.0%
100.0%
100.0%
-100.0%
--
Installed
capacity (MW)
208.00
161.04
198.00
50.00
50.00
50.00
49.98
49.50
49.50
49.50
49.50
49.50
49.50
49.50
49.50
49.50
49.30
49.30
49.30
49.24
48.84
48.00
47.60
46.86
46.00
45.54
45.05
45.05
44.60
44.35
44.20
43.35
42.00
41.65
40.00
40.00
1,935.67
333.00
4,391.08
Consolidated
capacity (MW)
208.00
161.04
198.00
50.00
30.00
50.00
24.99
17.94
17.94
49.50
49.50
49.50
12.38
49.50
49.50
49.50
49.30
49.30
49.30
49.24
48.84
48.00
47.60
46.86
46.00
45.54
28.63
11.26
44.60
44.35
44.20
43.35
42.00
10.41
40.00
40.00
1,766
333.00
3,994.41
Renewable energy facilities abroad
Wind Farm /
No. of wind farms IBERDROLA
Complex
/power stations capital(%)
Rokas Group
(Interconnected system)
8
49.9%
Rio do Fogo
1
100.0%
Kisielice (**)
1
100.0%
Rokas Group (Island system)
5
49.9%
Locust Ridge (**)
1
100.0%
Catefica
1
100.0%
Alogorachis (**)
1
100.0%
Holdenstedt - Bornstedt(**)
1
100.0%
La Butte de Fraus (**)
1
100.0%
2
100.0%
Wirfus (**)
St Aubain (**)
1
51.0%
Fitou (**)
1
90.0%
2
100.0%
Rastenberg (**)
Other wind farms
4
-Total
30
--
Percentage
consolidation
Installed
capacity (MW)
Consolidated
capacity (MW)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
---
166.90
49.30
40.50
26.40
26.00
18.00
17.00
12.00
12.00
12.00
11.50
10.40
10.00
33.70
445.70
166.90
49.30
40.50
26.40
26.00
18.00
17.00
12.00
12.00
12.00
5.87
10.40
10.00
33.70
440.07
Cogeneration power plants in Spain
Power plant
Azuvi
Cobane A.I.E.
Cofrusa Cogeneración
Gequisa
Cotasa
Enercrisa
Energía Portatil Cogeneración
Ge Plastics España
Michelín Aranda
Energyworks Carballo
Granja de Milagros
Sajusa
Cogeneración Energyworks
Fudepor, S.L. (**)
Genfibre
Hispagen
Intermalta
Italcogeneración
Olías del Rey
Torrijos
Peninsular Cogeneración, S.A.
La Seda
Zirconio Cogeneración
Purines En Fonz (**)
Purines En Monzon (**)
Maltamancha
Son Mos
Michelín Vitoria
Michelín Valladolid
Total
Installed
capacity (MW
5.0
13.7
6.6
11.0
14.0
17.0
4.0
95.4
28.3
13.1
7.4
7.4
30.0
15.0
49.0
4.0
10.0
4.8
5.0
5.0
41.5
5.1
4.0
7.4
15.0
3.3
33.6
47.0
46.0
548.2
IBERDROLA
ownership (%)
50.0
55.0
50.0
50.0
50.0
50.0
50.0
99.0
99.0
99.0
72.8
90.0
99.0
50.0
50.0
50.0
50.0
50.0
55.0
55.0
50.0
50.0
50.0
77.1
80.7
50.0
20.0
99.0
99.0
--
IBERDROLA
capacity (MW)
2.5
7.5
3.3
5.5
7.0
8.5
2.0
94.5
28.0
13.0
5.3
6.6
29.7
7.5
24.5
2.0
5.0
2.4
2.8
2.8
20.7
2.6
2.0
5.7
12.0
1.7
6.7
46.5
45.5
403.9
201
Nuclear power plants in Spain
IBERDROLA
interest (%)
52.69
15
100
50
49
28
Power plant
Almaraz
Ascó II
Cofrentes
Garoña
Trillo I
Vandellós II
Total
Number of
units
2
1
1
1
1
1
7
Installed
capacity (MW)
1,969
1,027
1,092
466
1,067
1,087
6,709
IBERDROLA
capacity (MW)
1,037
154
1,092
233
523
304
3,344
Number of
units
2
3
2
2
9
Installed
capacity (MW)
1,085
935
553
627
3,201
IBERDROLA
capacity (MW)
1,085
936
553
314
2,889
Fuel and gas thermal power plants in Spain
IBERDROLA
ownership (%)
100
100
100
50
Power plant
Castellón
Santurce
Escombreras
Aceca
Total
Coal-fired power plants in Spain
IBERDROLA
ownership (%)
100
100
100
Power plant
Lada
Guardo
Pasajes
Total
Number of
units
2
2
1
5
Installed
capacity (MW)
515
515
223
1,253
Principal Facilities in Latin America
Facilities in Mexico
Power plant
Type of facility
Enertek
Monterrey
Femsa-Titán
Altamira III and IV
La Laguna
Altamira V (**)
Cogeneration
Combined cycle
Cogeneration
Combined cycle
Combined cycle
Combined cycle
Total
202
Number of
units
1
4
1
2
1
1
10
IBERDROLA
ownership (%)
100%
100%
100%
100%
100%
100%
Installed
capacity (MW)
120
1,000
37
1,036
500
1,121
3,814
Capacity attributable to
IBERDROLA (MW)
120
1,000
37
1,036
500
1,121
3,814
Facilities in Brazil
Power plant
Type of facility
Itapebí√
Afluente (**)
Energy Works Brasil
Termopernambuco
Total
Hydroelectric
Mini-hydroelectric
Cogeneration
Combined cycle
Number of
units
3
2
1
6
IBERDROLA
ownership (%)
39.0%
44.2%
100.0%
39.0%
Installed
capacity (MW)
450
18
93
520
1,081
IBERDROLA (MW)
175
8
93
203
479
Facilities in Chile
Power plant
Ibener√
Type of facility
No. of
IBERDROLA
Installed
Hydroelectric
grupos
1
ownership (%)
100%
capacity (MW)
124
IBERDROLA (MW)
124
124
124
Total
1
Principal transmission, transformer and
distribution facilities in Spain
Very high-voltage and high-voltage lines
Length (km)
6,210
12,023
18,233
Type of line
Very high-voltage (132 kV)
High-voltage (66 and 45 kV)
Total
Distribution networks
Transformer stations
2006
Substations
In-plant (STs)
Receivers (STRs)
Total
Number of
facilities
280
583
863
Installed
capacity (MVA)
44,467
9,604
54,071
Facilities
Medium- and low-voltage lines (Km)
Overhead medium-voltage lines
Underground medium-voltage lines
Overhead low-voltage lines
Underground low-voltage lines
Transformer centers in service (number)
Installed capacity at transformer
stations (MVA)
2006
204,329
63,777
19,303
85,222
36,027
78,468
32,913
203
Companies in which the IBERDROLA Group holds an equity interest
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
Income
Address
Activity
Dec. 31,06
Iberdrola International, B.V.
Holland
Finance
100.00%
388
16,316
2,388
Red Eléctrica de España, S.A.
Madrid
Energy
3.00%
270,540
551,337
200,154
Capital
Reserves
Fy 2006
Iberdrola Finanzas, S.A.U.
Vizcaya
Finance
100.00%
61
-112
423
Eutilia, S.A.
Holland
Telecom
8.50%
44,598
(42,860)
n/d
(9,204)
Ciudad Real Aeropuertos, S.L.
Inversiones Financieras Perseo, S.L.
Galp, S.A.
Unesa
Equip Renda, S.L.
(3)
% Conso- Consoli-
C.Real
Services
9.22%
100,583
(4,117)
Vizcaya
Holding
100.00%
171
109
-21
Portugal
Energy
4.00%
829,251
1,331,657
n/d
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
G
3,184
G
G
43,718
Madrid
Energy
35.00%
-
-
-
Barcelona
Finance
96.97%
202
654
-224
Badajoz
Business activ.
25.58%
17,640
-3,831
-229
Portugal
Energy
100.00%
200
872,281
18,859
G
G
Corporación Empresarial
Envir./
Fomento
de Extremadura, S.A.
Iberdrola Portugal Electricidade
e Gas, S.A.
Iberdrola Participaçoes SGPS, S.A.
Portugal
Energy
100.00%
50
1,344,226
20,670
Energías de Portugal, S.A.
Portugal
Energy
9.50%
3,656,538
2,159,330
n/d
Iberdrola Reinsurance, S.A.
Luxemburg
Insurance
100.00%
1,225
362
2,905
Desafio Español 2007, S.A.
Madrid
Trade
26.00%
60
56
1,518
Korinthos Power, S.A.
Grecia
Services
70.00%
200
-
-1
Valencia
Energy
100.00%
125
3
n/d
Iberdrola Generación, S.A.U.
Vizcaya
Energy
100.00%
1,333,407
2,384,691
863,960
Fuerzas Eléctricas de Navarra, S.A.
Navarra
Energy
100.00%
60
50,225
8,464
Cartera Park, S.A.
G
Generation
539,552
G
E/S
G
Hidroeléctrica Ibérica, S.A.
Vizcaya
Energy
100.00%
15
54,204
5,804
G
Iberduero, S.L.U.
Vizcaya
Energy
100.00%
12
4,194
-9
G
Navidul Cogeneración, S.A.
Madrid
Energy
55.00%
1,923
-112
-253
P
E
Iberdrola Cogeneración, S.L.
Madrid
Holding
100.00%
6
37,331
-437
G
E/S
E
Energyworks Cartagena, S.L.
Murcia
Energy
99.00%
4
9,716
14,655
G
Albacete
Energy
99.00%
4
26
1,024
G
E
Energyworks Aranda, S.L.
Valladolid
Energy
99.00%
4
138
823
G
E
Energyworks Carballo, S.L.
A Coruña
Energy
99.00%
4
1,091
61
G
E
León
Energy
90.00%
1,373
588
381
G
E
Burgos
Energy
72.81%
1,400
750
434
G
E
Energyworks Villarrobledo, S.L.
Energyworks San Millán, S.L.
Energyworks Milagros, S.L.
Energyworks Venezuela, S.A.
Venezuela
Energy
100.00%
1,304
1,229
612
E
Energyworks Fonz, S.L.
Huesca
Energy
77.18%
1,406
-52
-29
G
Energyworks Monzon, S.L.
Huesca
Energy
80.68%
3,225
-108
-84
G
Energyworks Vit-Vall, S.L.
Vitoria
Energy
99.00%
4
-564
-6,631
G
E
Fudepor, S.L.
Murcia
Energy
50.00%
4,420
-44
-960
P
E
Nuclenor, S.A.
Cantabria
Energy
50.00%
102,000
-22,399
64,751
32,441
P
E
Bahía de Bizkaia Electricidad, S.L.
Vizcaya
Energy
25.00%
3,606
72,876
79,109
8,250
P
E
Central Nucelar Trillo-Almaraz, A.I.E.
Madrid
Energy
51.41%
-
-
-
P
E
Asociación Nuclear Ascó –
Vandellós II, A.I.E.
Barcelona
Energy
14.59%
19,232
-
-
P
E
Tarragona
Energy
50.00%
790
46,746
-13,163
P
E
Castellón
Energy
50.00%
752
-130
-446
P
E
Cofrusa Cogeneración, S.A.
Murcia
Energy
50.00%
1,200
4
-240
P
E
Cogeneración Gequisa, S.A.
Alava
Energy
50.00%
1,803
2,491
-574
P
A
Subgrupo Tarragona Power
Azuvi Cogeneración, S.A.
(1) Reserves + translation differences
(2) The Consolidation percentage is shown in those cases in which it differs from the actual percentage, according to the applicable consolidation method
(3) E: Company included under the environmental aspect – S: Company included under the social aspect
204
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
(3)
% Conso- ConsoliIncome
Address
Activity
Dec. 31,06
Cogeneración Tierra Atomizada, S.A. Castellón
Energy
Enercrisa, S.A.
Madrid
Energy
Guipúzcoa
Energy
50.00%
902
Burgos
Energy
50.00%
1,803
Envir./
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
1,416
P
A
1,315
P
A
814
60
P
E
-1,507
4,450
P
E
Capital
Reserves
Fy 2006
50.00%
721
1,007
50.00%
3,005
-317
Energía Portátil de
Cogeneración, S.A.
Genfibre, S.A.
Hispagen, S.A.
Burgos
Energy
50.00%
902
372
-114
P
E
Intermalta Energía, S.A.
Navarra
Energy
50.00%
1,503
518
181
P
E
Italcogeneración, S.A.
Castellón
Energy
50.00%
751
366
-8
P
E
Madrid
Energy
50.00%
9,000
5,092
726
P
E
S.E.D.A. Cogeneración, S.A.
Palencia
Energy
50.00%
240
668
78
P
E
Zirconio Cogeneración, S.A.
Castellón
Energy
50.00%
61
317
124
P
E
Palma de Mallorca
Energy
20.00%
7,663
13,455
4,430
P
Madrid
Energy
30.00%
4,026
16,298
1,692
Peninsular de Cogeneración, S.A.
Tirme, S.A.
Tecnatón, S.A.
Desarrollo Tecnológico
Nuclear, S.L. (DTN, S.L.)
Elcogas, S.A.
Madrid
Services
43.45%
4
158
-142
Madrid
Energy
11.96%
38,162
-664
-14,259
Castellón
Energy
100.00%
3,000
3,267
3,058
Vizcaya
Energy
100.00%
645,210
1,124,824
224
Iberdrola Operación y
Mantenimiento, S.A.
G
E/S
170,719
G
E/S
Regulated Business
Iberdrola Distribución Eléctrica, S.A.U.
Hidroeléctrica San Cipriano de
Valladolid
Energy
100.00%
708
362
190
82
E
Herederos de María Alonso Calzada, S.L. Valladolid
Energy
100.00%
56
92
49
26
E
Subgrupo Anselmo León
Valladolid
Energy
100.00%
1,082
6,723
4,575
1,187
E
Cuenca
Energy
53.59%
3,087
2,065
378
241
G
18
G
Rueda, S.L.
Subgrupo Eléctrica Conquense
Ocoval, A.I.E.
Valencia
Services
14.28%
250
108
-
Inkolan, A.I.E.
Vizcaya
Services
14.28%
84
54
-
Distribuidora Eléctrica Elorrio, S.A.
Vizcaya
Energy
96.86%
65
205
49
Empresa Eléctrica del Cabriel, S.L.
Albacete
Energy
100.00%
294
1
-2
E
Iberdrola Distribución de Gas, S.A.U.
Valencia
Gas
100.00%
2,000
-145
-729
G
Iberdrola Infraestructuras Gasistas, S.L.
Madrid
Gas
100.00%
5,000
110
28
G
Infraestructuras Gasistas de Navarra, S.L. Navarra
Gas
50.00%
1,003
3,862
504
Bahía de Bizkaia Gas, S.L.
Vizcaya
Gas
25.00%
6,000
66,605
15,125
Iniciativas del Gas, S.A.
Madrid
Gas
60.00%
1,300
-390
120
P
Planta de Regasificación de Sagunto, S.A. Valencia
Gas
30.00%
1,500
-365
9,014
P
Vizcaya
Marketing
100.00%
300
8
1
G
Energía, S.A.
Portugal
Consulting
100.00%
500
196
5
G
Vector M, S.A.U.
Vizcaya
Marketing
100.00%
4,410
-440
-224
E
Barcelona
Energy Trade
57.50%
510
145
-827
G
Madrid
Gas
15.79%
28,500
-487
-555
Madrid
Gas
100.00%
60
0
0
S
P
3,000
P
Supply Business
Productos y Servicios Confort, S.A.
Iberdrola II Comercializacion
Factor Energía, S.A.
Gas Business
Sociedad para el Estudio y la Promoción
del Gaseoducto Argelia-Europa
Via España, S.A. (MEDGAZ, S.A.)
Gas Nostrum, S.A.U.
205
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
(3)
Envir./
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
Address
Activity
Dec. 31,06
Capital
Reserves
Fy 2006
Subgrupo Amara
Madrid
Services
100.00%
3,606
16,545
4,807
E
Subgrupo Iberdrola Inmobiliaria
Madrid
Real Estate
100.00%
221,002
361,860
108,751
G
Madrid Telemarketing
100.00%
2,725
1,567
1,089
E
Holding
50.00%
228,445
371,902
532,755
150,000
P
2,400
E
Non-Energy Businesses
E/S
Investigación y Desarrollo de
Equipos Avanzados, S.A.
Subgrupo Corpor. IBV
Particip. Empresariales
Vizcaya
Subgrupo Gamesa Corporación
Alava
Holding
24.39%
41,361
758,337
220,126
Euskaltel
Tecnológica
Vizcaya
Telecom
11.14%
325,200
32,859
32,541
E
NEO – SKY 2002, S.A.
Madrid
Telecom
94.29%
65,673
-12,336
-8,962
G
Hidrola I, S.L.U
Madrid
Energy
100.00%
5
-2
-1
-
Hidroeléctrica Española, S.L.U.
Madrid
Energy
100.00%
5
-2
-
-
Veo Televisión, S.A.
Madrid
Telecom
20.00%
27,329
-525
-9,208
E
Iberdrola Inversiones 2010, SAU
Vizcaya
Real Estate
100.00%
75,000
-602
11,654
G
Torre Iberdrola, AIE
Vizcaya
Real Estate
50.00%
150,000
290
280
P
Refineria Balboa, S.A.
Badajoz
Energy
10.00%
50,000
8
-102
-
Iberdrola Energía Renovables, S.A.U.
Madrid
Energy
100.00%
164,600
191,666
110,953
36,411
G
Eolicas de Euskadi, S.A.
Vizcaya
Energy
50.00%
22,066
5,629
11,199
5,918
P
Energía I Vent, S.A.
Barcelona
Energy
90.00%
2,100
-266
-8
G
Biovent Energía, S.A.
Valladolid
Energy
85.00%
12,000
12,595
20,327
G
Promociones S.A.U.
Madrid
Energy
100.00%
28,309
5,903
25,286
Global Solar Energy, S.A.
Murcia
Energy
90.00%
1,500
-
-9
Renewable Energy
E/S
Iberdrola Energía Renovables
Sistemas Energéticos Moncayo, S.A.
9,309
G
Soria
Energy
75.00%
1,958
2,029
2,341
G
Valladolid
Energy
100.00%
61
-1
535
G
Electra de Malvana, S.A.
Cáceres
Energy
48.00%
500
-
-11
P
G
Sistema Energéticos Los Campillos
E
G
Electra Sierra de San Pedro, S.A.
Cáceres
Energy
80.00%
500
-
-11
Electra de Montachez, S.A.
Cáceres
Energy
40.00%
500
-
-30
Ciener, S.A.U.
Vizcaya
Energy
100.00%
6,545
10,305
5,198
Minicentrales del Tajo, S.A.
Toledo
Energy
66.58%
362
525
43
G
Saltos de Belmontejo, S.L.
Cuenca
Energy
24.84%
500
-13
-12
P
E
P
1,791
G
E
Castilla-la Mancha, S.A.U.
Toledo
Energy
100.00%
7,603
72,373
68,215
Eólica de Campollano, S.A.
Madrid
Energy
25.00%
6,560
4,038
8,920
37,206
G
P
Energías Eólicas de Cuenca, S.A.
Cuenca
Energy
62.50%
7,600
-55
-42
G
E
de Galicia, S.A. U.
Sotavento Galicia, S.A.
Sistemas Energéticos Chandrexa, S.A.
Orense
Energy
100.00%
47,828
5,507
54,854
A Coruña
Energy
8.00%
601
745
445
33,039
G
E
Orense
Energy
96.07%
1,415
540
1,546
G
Somozas Energía y Recursos
A Coruña
Energy
90.00%
60
-60
1
G
Biovent Holding, S.A.
Medioambientales, S.A. (Soermasa)
Valladolid
Energy
85.00%
32,079
-109
-14
G
Electra de Layna, S.A.
Valladolid
Energy
42.50%
4,278
-37
43
P
Productora de Energía Eólica, S.A. Valladolid
Energy
50.92%
1,874
-7
-9
G
206
E
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
(3)
Envir./
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
Address
Activity
Dec. 31,06
Capital
Reserves
Fy 2006
Generación de Energía Eólica, S.A. Valladolid
Energy
51.00%
100
-6
-9
G
Aerocastilla, S.A.
Valladolid
Energy
51.00%
1,363
-5
-9
G
Villardefrades Eólicas, S.L.
Valladolid
Energy
68.00%
1,788
-5
-10
G
Parque Eólico Cruz del Carrutero, S.L. Valladolid
Energy
54.40%
710
-7
-3
G
Parque Eólico Los Collados, S.L.
Valladolid
Energy
68.00%
250
-6
-8
G
Parque Eólico Fuente Salada, S.L.
Valladolid
Energy
68.00%
525
-7
-3
G
Eolicas Fuente Isabel, S.A.
Valladolid
Energy
51.00%
61
-6
-10
G
Vientos de Castilla y León, S.A.
Valladolid
Energy
51.00%
61
-6
-11
G
Energia Castilla y León, S.A. (Encalsa) Valladolid
Energy
76.50%
1,900
-6
225
G
Ecobarcial, S.A.
Zamora
Energy
39.02%
25,610
0
-274
G
Energía Global Castellana, S.A.
Valladolid
Energy
51.00%
61
-6
-273
G
Peache Energía Renovables, S.A.
Valladolid
Energy
51.00%
61
0
-10
G
Valladolid
Energy
76.50%
13,400
-
-11
G
Producciones Energéticas de
Castilla y León, S.A.
de la Rioja, S.A.
Eólicas de la Rioja, S.A.
La Rioja
Energy
63.55%
6,015
75,351
23,331
La Rioja
Energy
63.55%
6,010
-1,704
7,062
4,386
P
P
Desarrollo de Energías
La Rioja
Energy
40.51%
16,500
-113
4,153
Molinos del Cidacos, S.A.
Renovables de La Rioja, S.A.
La Rioja
Energy
31.78%
10,250
6,815
8,445
63.55%
P
Molinos de la Rioja, S.A.
La Rioja
Energy
42.37%
3,000
2,174
1,220
63.55%
P
Cantabria
Energy
60.00%
2,600
-
-29
Murcia
Energy
50.00%
51,230
536
2,983
Sevilla
Energy
100.00%
60
70
-703
G
Málaga
Energy
55.00%
61
10
-10
G
Málaga
Energy
55.00%
2,286
-199
-126
G
Eme Dólar Uno, S.L.
Sevilla
Energy
100.00%
3
-5
-25
G
Eme Hueneja Tres, S.L.
Sevilla
Energy
100.00%
3
-5
-34
G
E
Eme Dólar Tres, S.L.
Sevilla
Energy
100.00%
3
-4
-42
G
E
Eme Ferreira Dos, S.L.
Sevilla
Energy
100.00%
3
-5
-27
G
E
Sistema Eléctrico de Conexión Huenéja, S.L. Granada
Energy
41.80%
580
-7
-170
Zaragoza
Energy
100.00%
29,102
1,394
24,099
Sistemas Energéticos La Muela, S.A. Zaragoza
Energy
50.00%
3,065
1,739
2,350
Sistemas Energéticos Torralba, S.A. Zaragoza
Energy
60.00%
3,081
647
4,543
G
Sistemas Energéticos Mas-Garullo, S.A. Zaragoza
Energy
51.00%
1,503
747
1,799
G
P
Iberdrola Energía Marinas
de Cantabria, S.A.
G
Energías Renovables de la
Región de Murcia, S.A.
50.00%
P
Iberdrola Energías Renovables
de Andalucia, SAU
E
Sociedad Gestora para parques Eólicos
del Campo de Gibraltar (SOGECAM)
Sociedad Gestora de Parques Eólicos
de Andalucia (Geansa)
41.80%
E
P
de Aragón, S.A.U.
8,628
G
E
G
Energías Renováeis do Brasil,
Ltda. (Enerbrasil)
Aeolia Produçao de Energia, S.A.
Metal Industry of Arcadia C. Rokas, S.A.
Iberdrola Energie Rinnovabili, SPA
Brazil
Energy
100.00%
39,176
-7,388
193
G
Portugal
Energy
78.00%
150
368
-302
G
Greece
Energy
49.90%
11,887
69,266
9,819
Italy
Energy
100.00%
120
66
-381
1,743
G
G
207
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
(3)
Address
Activity
Dec. 31,06
Capital
Reserves
Fy 2006
UK
Energy
100.00%
0
-498
-1,420
Envir./
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
Iberdrola Renewable Energies
of UK Limited
G
Higher Darracott Moor
Wind Farm Limited
Iberdrola Energies Renouvelables, SAS
UK
Energy
100.00%
0
-23
-34
G
France
Energy
100.00%
19
-1,549
-1,413
G
Grupo Perfect Wind
France
Energy
100.00%
2,037
890
-1,255
G
Parc Eolien La Nourais, SAS
France
Energy
100.00%
37
1
-29
G
Germany
Energy
100.00%
25
30,514
-722
G
Iberdrola Regenerative Energien, Gmbh
Iberdrola Regenerative Energien
Verwaltungs, Gmbh
Germany
Energy
100.00%
25
-
-2
G
Windfarm Wirfus, Gmbh
Germany
Energy
100.00%
25
-41
199
G
EBV Windpark 23, Gmbh
Germany
Energy
100.00%
5
-296
515
G
Rastenberg, Gmbh
Germany
Energy
100.00%
5
231
111
G
Windpark Jülicher Land
Germany
Energy
100.00%
25
-3
G
Iberdrola Energias Renovaveis, S.A. Portugal
Energy
100.00%
50
679
1,118
G
Poland
Energy
100.00%
25
-190
-1,212
G
Poland
Energy
100.00%
13
-23
27
G
Renewable Energies USA Limited
U.S.A.
Energy
100.00%
82,392
-1,381
-4,304
G
Subgrupo Community Energy INC
U.S.A.
Energy
100.00%
40,832
Estonia
Energy
80.00%
943
Iberdrola Ener'gia Odnawialna
Spo3ka Z Ograniczon
Energía Wiatrowa
Karscino S.P. ZOO EWK
Subgrupo Iberdrola
Ousaúhning Raisner, A.S.
336
-4,901
G
-231
G
E.C. Energoconsult
Hungary
Energy
100.00%
11
21
-83
G
Greece
Energy
100.00%
60
3,924
-225
G
Vizcaya
Engineering
100.00%
661
106,144
29,281
G
E/S
Madrid
Engineering
100.00%
195
-47
97
G
E
Brazil
Engineering
100.00%
528
340
-52
G
Mexico
Engineering
99.99%
1,361
4,468
3,104
G
Mexico
Engineering
100.00%
4
44
-11
G
Grupo Ghesa Ingeniería y Tecnología, S.A. Madrid
Engineering
41.18%
4,087
16,273
3,580
E
Madrid Safety systems
37.00%
601
-18
-
E
Empresarios Agrupados Internacional, S.A. Madrid
Engineering
25.46%
1,202
2,193
211
E
Empresarios Agrupados, A.I.E.
Madrid
Engineering
25.46%
162
588
-
E
Enermón, S.A. de C.V.
Mexico
Services
99.99%
4
1
157
G
Poland
Engineering
100.00%
13
5
171
G
UK
Engineering
100.00%
-
-
50
G
Russia
Engineering
100.00%
-
-
5
G
Mernökszolgalati, I.E.K.
Energiaki Alogorachis, S.A.
Engineering and Construction
Iberdrola Ingeniería y Construcción, S.A.
Iberdrola Ingeniería y
Consultoría Servicios, S.A.U.
Iberdrola Consultoría e
Serviços do Brasil, Ltda.
Grupo Iberdrola Ingeniería y
Consultoría México, S.A. de C.V.
Sublin 2, S.A. de C.V.
Keytech Sistemas Integrales, S.A.
Iberdrola Engineering and
Construcction Poland SP ZOO
Construcction UK Ltd.
Iberdrola Inzhiniring I Stroiteistvo
Limited Liability Company
208
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
(3)
Envir./
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
Address
Activity
Dec. 31,06
Capital
Reserves
Fy 2006
Venezuela
Engineering
99.81%
1
-
2
G
Greece
Engineering
100.00%
18
-
3
G
Germany
Engineering
100.00%
24
-
-
G
Madrid
Holding
100.00%
1,477,831
196,147
228,384
G
Iberdrola Ingenieria y
Construcción Venezuela, S.A.
Iberinco Hellas Techniki Kai
Kataskevastiki Epe
Construction Germany Gmbh
International
Iberdrola Energía, S.A.U.
South America Region
Energyworks do Brasil, Ltda.
Brazil
Energy
99.99%
40,711
4,797
5,726
Iberdrola Energía do Brasil, S.L.
Brazil
Holding
99.99%
30,013
-27,081
-1,116
6,767
G
G
E
Capuava Energy, Ltda.
Brazil
Energy
99.99%
5,774
-3,534
2,120
G
E
P
E/S
Companhia de Electricidade
Brazil
Energy
42.76%
394,188
-136,547
197,754
Garter Properties, Inc.
do Estado da Bahia, S.A.
Brazil
Energy
42.76%
28,656
-28,468
-151
12,583
44.19%
Itapebí Generaçao de Energía, S.A.
Brazil
Energy
38.98%
84,770
-30,184
24,529
7,805
Brazil
Energy
39.95%
102,103
13,384
51,710
3,682
Grupo NC Energía
Brazil
Services
39.00%
4,973
-4,611
5,436
Neoenergía, S.A.
Brazil Holding-Energy
39.00%
2,911,765 -1,066,795
364,030
Baguari-Uhe
Brazil
Services
39.00%
3,660
-131
-
P
Goias Sul PCH
Brazil
Services
39.00%
1,865
-80
-
P
Termopernambuco, S.A.
Brazil
Energy
39.00%
141,366
-34,177
36,702
P
E
Brazil
Energy
34.96%
337,192
-26,592
79,678
P
E/S
Brazil
Energy
14.65%
176,095
7,554
-
P
P
E
P
E/S
Companhia Energetica
Do Rio Grande Do Norte, S.A.
43.28%
E
35,787
P
Companhia de Electricidade
do Pernambuco, S.A.
Termoaçu, S.A.
39.00%
E
Iberdrola Energía Chile, Ltda.
Chile
Holding
99.90%
75,704
-13,093
-424
G
Iberaguas, Ltda.
Chile
Holding
99.80%
87,455
-10,174
2,120
G
Iberoamericana de Energía Ibener, S.A. Chile
Energy
94.74%
168,654
-64,977
15,333
G
E/S
E
E/S
Empresa de Servicios Sanitarios
Chile
Water
50.90%
68,090
1,178
10,366
Iberdrola Inversiones, S.R.L.
Bolivia
Holding
99.99%
56,713
-19,864
2,092
Iberbolivia de Inversiones, S.A.
Bolivia
Holding
63.39%
87,620
-28,292
3,336
E
Bolivia
Services
59.26%
467
1,049
1,200
E
de Los Lagos, S.A.
1,827
G
Compañía Administradora
de Empresas – Bolivia, S.A.
Empresa de Luz y
Bolivia
Energy
58.85%
3,421
52
1,062
E
E/S
Electricidad de La Paz, S.A.
Bolivia
Energy
56.77%
28,667
8,448
2,904
E
E/S
Empresa de Servicios, S.A.
Bolivia
Energy
55.73%
281
795
321
E
Portugal
Services
100.00%
263,240
-224,227
-449
G
Fuerza Eléctrica de Oruro, S.A.
Iberdrola investimento SUL
Afluente Geraçao e
Transmissao de Energía, S.A.
Brazil
Energy
42.76%
68,458
-46,654
12,184
P
Geraçao CIII, S.A. (Corumba III)
Brazil
Energy
39.04%
-
-
-
P
Servicios de Operación Altamira, S.A. de C.V. Mexico
Services
99.99%
5
-52
260
-
G
Energy
99.99%
12
-11
0
-
G
Mexico-Guatemala Region
Electricidad de Veracruz II, S.A. de C.V.
Mexico
209
E thousands
% direct or
(1)
(2)√
indirect equity
interest at
Company
(3)
Address
Activity
Dec. 31,06
Capital
Reserves
Fy 2006
Electricidad de Veracruz, S.A. de C.V. Mexico
Energy
99.99%
5,320
-1,483
58
Envir./
Dividends
lidated
dation
Social
Fy 2006
31.12.06
Method
Report
G
Iberdrola Energía Altamira
de Servicios, S.A. de C.V.
Mexico
Services
99.99%
2,185
-886
167
G
S
Iberdrola Energía Altamira, S.A. de C.V. Mexico
Energy
99.99%
178,934
-17,314
17,119
G
E/S
Iberdrola Energía La Laguna, S.A. de C.V. Mexico
Energy
99.99%
90,809
1,963
23,527
G
E/S
Iberdrola Energía Monterrey, S.A. de C.V. Mexico
Energy
99.99%
159,507
-49,770
17,044
G
E/S
Mexico
Holding
99.99%
792,500
-42,997
19,968
G
Iberdrola Servicios Monterrey, S.A. de C.V. Mexico
Iberdrola México S.A. de C.V.
Services
99.99%
5
17
-22
G
Cinergy, S. de R.L. de C.V.
Mexico
Services
99.99%
160
25
-33
Enertek, S.A. de C.V.
Mexico
Energy
99.99%
41,063
28,220
10,043
G
G
G
A/S
Servicios Industriales y Administrativos
del Noreste, S. de R.L. de C.V.
Mexico
Services
51.12%
3,893
-1,355
58
Gas Natural México, S.A. de C.V.
Mexico
Energy
13.25%
615,950
-341,604
13,113
E
Mexico
Energy
13.00%
16
251
7
E
Guatemala
Energy
49.00%
285,424
-76,074
40,706
Guatemala
Energy
39.63%
5,040
7,977
2,702
49.00%
P
Guatemala
Energy
39.63%
108,671
-6,530
38,899
49.00%
P
E/S
49.00%
P
E/S
Sistemas de Administración
y Servicios, S.A. de C.V.
Distribuidora Eléctrica
Centroamericana II, S.A.
5,216
P
Comercializadora Eléctrica
de Guatemala, S.A.
Empresa Eléctrica
de Guatemala, S.A.
Transportista Eléctrica
Centroamericana, S.A.
Enérgica, S.A.
Guatemala
Energy
39.63%
25,874
-1,153
9,443
Guatemala
Energy
39.63%
840
2,862
972
E
Credieegsa, S.A.
Guatemala
Energy
39.63%
138
1,086
211
49.00%
E
Grupo Navega.com
Guatemala
Telecom
26.95%
3,356
6,775
3,021
49.00%
P
México
Energy
99.99%
117,584
-7,487
5,549
G
E/S
México
Energy
99.95%
417
-243
-
G
√
México
Services
99.99%
5
-52
260
G
México
Energy
99.99%
93,919
2,438
-163
G
Guatemala
Services
48.97%
124
704
294
E
Iberdrola Energía
del Golfo, S.A. de C.V.
Parqués Ecológicos
de México, S.A. de C.V.
Servicios de Operación
La Laguna, S.A. de C.V.
Iberdrola Energía
Tamazunchale, S.A. de C.V.
Almacenaje y Manejo de Materiales
Electricos, S.A. (AMESA)
Inversiones Eléctricas
Guatemala
Holding
39.63%
54,314
-11,490
14,012
Gestión Empresas Eléctricas, S.A. Guatemala
Centroamericanas (INVELCA)
Services
99.99%
0
171
4,604
49.00%
G
G
México
Services
99.99%
4
-74
104
G
Guatemala
Real Estate
39.63%
2,173
-616
217
Iberdrola Servicios de
Capacitación, S.A. de C.V.
Inmobiliaria y Desarrolladora
Empresarial de America, S.A.
49.00%
210
P
S
Human Resources Statistical Data
Workforce
IBERDROLA Group
Total headcount
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
2005
2004
8,130
8,252
8,546
2,070
1,696
1,493
2,795
2,753
2,693
12,995
12,701 12,732
10,633 10,753
By gender
Men
7,041
7,174
7,488
1,551
1,281
1,130
2,193
2,178
2,135
10,785
Women
1,089
1,078
1,058
519
415
363
602
575
558
2,210
316
337
331
99
67
54
203
209
214
618
613
599
Advanced Degree Holders 653
651
645
643
509
461
409
376
359
1,705
1,536
1,465
Basic Degree Holders 1,319
1,337
1,388
316
270
248
971
914
898
2,606
2,521
2,534
Professionals
4,753
4,849
5,124
493
435
367
610
678
664
5,856
5,962
6,155
32
34
30
9
7
4
44
43
42
85
84
76
2,068
1,979
By category
Men
Managers
Women
Managers
Advanced Degree Holders 289
270
248
293
230
205
225
197
190
807
697
643
Basic Degree Holders
185
181
171
66
52
48
191
191
204
442
424
423
Professionals
583
593
609
151
126
106
141
144
123
875
863
838
Full-time
8,130
8,252
8,546
2,019
1,661
1,468
2,795
2,753
2,693
12,944
Part-time
0
0
0
51
35
25
0
0
0
51
35
25
Temporary contract
78
138
54
955
233
234
84
70
31
1,117
441
319
Permanent contract
8,052
8,114
8,492
1,115
1,463
1,259
2,729
2,691
2,680
11,896
By type of employment
12,666 12,707
By type of contract
12,268 12,431
By age range
Up to 30
Between 30 and 50
Over 50
825
758
676
874
731
679
629
539
484
2,328
2,028
1,839
4,292
4,465
4,667
1,063
856
701
1,770
1,879
1,923
7,125
7,200
7,291
3,013
3,029
3,203
133
109
113
396
335
286
3,542
3,473
3,602
45.33
45.37
45.78
34.61
34.06
34.08
40.15
40.28
40.49
42.62
42.86
43.38
Men
45.73
45.82
46.28
35.12
34.32
34.51
40.68
40.74
40.95
43.28
43.5
44.09
Women
42.71
42.31
42.03
33.1
33.26
32.8
38.17
38.54
38.68
39.32
39.5
39.42
Average age
By gender
By category
Managers
47.53
47.32
47.18
45.71
46.46
47.56
42.76
43.11
43.34
45.6
45.68
45.72
Advanced Degree Holders 39.68
39.66
39.56
34.48
34.51
34.63
38.07
37.87
37.5
37.42
37.51
37.52
Basic Degree Holders 44.83
44.72
44.91
34.48
34.86
34.22
39.11
38.74
39.52
41.44
41.47
41.84
Professionals
46.33
46.39
46.89
33.02
31.27
31.83
42.55
43.13
43.08
44.7
44.88
45.56
Average length of service 19.73
19.79
20.23
5.03
5.16
5.15
14.7
14.9
14.84
16.46
16.9
17.44
By gender
Men
20.14
20.24
20.74
5.1
5.15
5.13
15.16
15.29
15.17
17.11
17.54
18.13
Women
17.01
16.7
16.5
4.81
5.2
5.2
13.02
13.39
13.56
13.19
13.54
13.64
18.11
18.02
17.88
7.41
7.4
5.86
14.56
14.91
15.27
15.39
15.8
15.88
By category
Managers
11.48
11.34
5.21
5.78
5.86
11.53
11.71
10.65
9.25
9.69
9.49
18.97
19.22
5.01
4.9
4.48
14.2
13.94
14.52
15.57
15.62
16.03
Professionals
21.55
22.04
4.43
4.19
4.56
18
18.35
18.06
19.54
19.88
20.55
21.47
211
Hirings
IBERDROLA Group
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
2005
2004
229
265
275
355
240
255
153
167
153
737
672
683
40
54
67
141
91
55
70
53
61
251
198
183
By gender
Men
Women
By category
Managers
7
8
15
28
8
4
7
11
17
42
27
36
Advanced Degree Holders
56
57
56
285
151
147
83
71
78
424
279
281
Basic Degree Holders
32
44
89
79
55
51
86
99
90
197
198
230
174
210
182
104
117
108
47
39
29
325
366
319
Professionals
Separations
IBERDROLA Group
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
8,130
8,252
8,546
2,070
1,696
1,493
2,795
2,753
2,693
12,995
362
579
622
85
89
91
137
125
133
584
793
846
29
34
43
37
39
43
44
36
70
110
109
156
Men
5.14%
8.07%
8.31%
5.48%
6.95%
8.05%
6.26%
5.75%
6.23%
5.42%
7.46%
7.87%
Women
2.66%
3.15%
4.06%
7.13%
9.40%
11.85%
7.24%
6.30%
12.51%
4.96%
5.28%
7.87%
Total headcount
2006
2005
2004
12,701 12,732
Job openings by gender
Men
Women
Job openings by gender (%)
By age range
Up to 30
Between 30 and 50
Over 50
6
8
12
62
69
55
48
56
44
116
133
111
43
38
46
50
46
68
83
76
98
176
160
212
342
567
607
10
13
11
50
29
61
402
609
679
By age range (%)
Up to 30
0.73%
1.06%
1.78%
7.09%
9.44%
8.10%
7.69%
10.39%
9.19%
5.00%
6.56%
6.06%
Between 31 and 50
1.00%
0.85%
0.99%
4.70%
5.37%
9.70%
4.65%
4.08%
5.07%
2.46%
2.23%
2.90%
11.35%
18.72%
18.95%
7.52%
11.93%
9.73%
12.66%
8.59%
21.27%
Over 60
11.35% 17.53% 18.85%
Employees covered by collective bargaining agreements
IBERDROLA Group
Total headcount
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
8,130
8,252
8,546
2,070
1,696
1,,493
2,795
2,753
2,693
12,995
12,701 12,732
2005
2004
1,592
1,409
2,490
2,492
2,468
12,125
11,965 12,062
89.11% 90.55%
91.66%
Individuals covered
by an agreement
Percentage
212
7,782
7,881
8,185
1,853
95.72%
95.50%
95.78%
89.52%
93.87% 94.37%
93.31% 94.21% 94.74%
Employees represented on Safety and Health committees
IBERDROLA Group
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
8,130
8,252
8,546
2,070
1,696
1,493
2,795
2,753
2,693
12,995
12,701 12,732
8,130
8,252
8,546
1,513
888
795
1,638
1,616
1,630
11,281
10,756 10,971
100.00% 100.00%
100.00%
73.09%
52.36% 53.25%
58.61%
58.71%
60.53%
Total headcount
2005
2004
Represented on safety and
security committees
Percentage
86.81% 84.69% 86.17%
Accident rates
IBERDROLA Group
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
2005
2004
171
204
221
42
36
38
53
56
50
266
296
309
2
0
0
0
0
0
0
0
0
2
0
0
With lost time
87
88
98
17
17
14
34
35
27
138
140
139
Without lost time
82
116
123
25
19
24
19
21
23
126
156
170
Company
2
0
0
0
0
0
0
0
0
2
0
0
Contractors
8
6
1
1
0
0
5
4
2
14
10
3
6,536
4,728
6,499
597
215
278
4,570
4,457
3,204
11,703
9,400
9,981
4,176
4,085
3,107
Number of accidents
Fatal
Number of deaths
No. of days lost
Absenteeism
2,141
1,896
1,583
1,264
618
840
680
593
Lost work days
(no. of sick leaves per year) 1,753
84,323
85,709
91,363
8,956
7,912
3,451
11,875
11,525
11,241
Person-equivalents
231.02
234.82
250.31
24.54
21.68
9.45
32.52
31.56
30.78
288.08
1.32
1.32
1.37
1.02
1.15
1.01
1.27
1.37
1.89
1.26
1.31
1.4
0.01
0.07
0.01
0
0
0.07
3.25
1.95
1.37
0.79
0.52
0.22
97.15
70.65
91.08
35.91
14.6
20
170.6
170.57
222.46
105.73
10,026.72 10,246.21
10,243.07
4,227.80
4,296.82 3,540.55
6,291.68
7,911.14 7,807.15 8,518.81
Injury ratio (IR)
105,154 105,146 106,055
288.05 290.55
Occupational disease
ratio (ODR)
Lost-days
ratio (LDR)
87.22 100.15
Absenteeism
ratio (AR)
4,281.80 1,979.52
The formulas used to calculate the these ratios are the ones indicted in the GRI Guidelines (Version 3).
Major health and safety indicators
IBERDROLA GROUP
2006
2005
2004
87
88
98
2
0
0
6,536
4,728
6,499
Frequency rate
6.76
6.58
6.87
Incidence rate
1.09
1.05
1.13
0.5
0.35
0.46
2.78
2.68
2.71
Accidents at work with lost time
Fatal accidents
Days lost due to accidents
Severity rate
Absenteeism rate
213
Training
IBERDROLA Group
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
2005
2004
Number of Attendees 33,735
29,228
22,134
8,581
7,621
4,968
11,922
10,849
6,210
54,238
47,698
33,312
31,696
25,583
19,161
7,087
6,130
4,217
9,767
8,970
5,079
48,550 40,683 28,457
2,039
3,645
2,973
1,494
1,491
751
2,156
1,879
1,131
5,689
7,015
4,855
By gender
Men
Women
By category
475
919
696
183
87
53
1,179
1,041
671
1,837
2,047
1,420
Advanced Degree Holders 3,486
2,284
1,722
617
230
129
3,192
2,600
1,276
7,295
5,114
3,127
Managers
5,677
7,288
2,238
1,766
1,623
4,197
4,297
2,384
12,657
20,348
12,428
5,543
5,538
3,163
3,354
2,911
1,879
32,449 28,797 17,470
329,704 324,416
293,210
132,162
96,217 112,908
198,604 183,536
165,361
660,470 604,168 571,479
289,832 279,533
167,475 155,500
137,197
566,326 514,847 485,539
Professionals
Number of hours
23,552
11,740 11,295
By gender
Men
255,314
109,019
79,814
93,027
39,872
44,883
37,896
23,142
16,402
19,881
31,130
28,036
28,164
94,144
8,342
20,462
16,117
2,243
857
1,315
10,095
17,369
11,700
20,680 38,688 29,132
Advanced Degree Holders 72,052
50,796
39,871
12,400
3,912
3,927
39,999
31,943
28,209
124,450
55,215
100,957
22,987
18,349
34,372
74,654
58,935
61,933
177,289 132,499 197,262
169,662 197,943
136,265
94,532
73,099
73,294
73,857
75,288
63,519
338,051 346,331 273,078
34.31
63.85
56.73
75.63
71.07
66.68
61.41
Women
89,321 85,941
By category
Managers
Professionals
Average training hours 40.55
39.31
86,651 72,007
50.83
47.57
44.89
By gender
Men
41.16
38.96
34.1
70.29
62.31
82.33
76.37
71.4
64.27
52.51
48.42
45.16
Women
36.61
41.64
35.82
44.59
39.52
54.77
51.74
48.76
50.44
42.61
43.19
43.42
By category
Managers
23.97
55.15
44.65
20.77
11.58
22.67
40.92
68.81
45.79
29.43
55.47
43.19
55.15
44.65
13.25
5.29
5.9
63.02
55.73
51.45
49.53
38.8
34.17
36.37
64.76
60.18
56.98
116.12
64.26
53.33
56.18
58.17
44.99
66.7
31.8
36.37
23.77
146.79
130.3
154.96
98.29
91.58
80.73
50.22
50.74
39.05
Professionals
Training for the improvement of managerial abilities
IBERDROLA Group
Affiliates in
Affiliates in
Social
Latin America
Spain
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
2005
2004
Internal courses
0
0
0
4
22
11
1,285
702
735
1,289
724
746
Outside training
1,408
2,314
1,865
854
438
86
860
603
515
3,122
3,355
2,466
0
0
0
0
0
0
0
0
2
0
0
2
Number of attendees
Sabbatical periods
Ratio of basic wages over the legal minimum
IBERDROLA Group
Total headcount
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
8,130
8,252
8,546
2,070
1,696
1,493
2,795
2,753
2,693
12,995
169.47% 178.69%
186.77%
209.68% 232.06%
239.95%
2005
2004
12,701 12,732
minimum entrylevel
wage % over the national
minimum wage
214
225.98% 226.36% 230.34%
181.95% 188.67% 194.74%
Performance evaluations
IBERDROLA Group
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
2006
2005
2004
2006
2005
2004
2006
Number of employees 8,130
8,252
8,546
2,070
1,696
1,493
2,795
2,753
2,693
12,995
8,252
8,546
1,280
929
725
1,067
255
259
10,477
100.00% 100.00%
100.00%
61.84%
54.78% 48.56%
38.20%
9.28%
9.62%
2005
2004
12,701 12,732
Number of employees
receiving performance
reviews
8,130
9,436
9,530
% of employees who
receiving performance
reviews
80.63% 74.30% 74.85%
Composition of the Board of Directors
IBERDROLA Group
2006
2005
2004
15
19
21
14
19
21
1
0
0
Up to 30
0
0
0
Between 31 and 50
2
0
0
13
19
21
Corporate Decision-Making
Bodies (number)
By gender (number)
Men
Women
By age range (in years)
Over 50
Pay ratios for male and female employees
IBERDROLA Group
2006
2005
2004
Affiliates in
Affiliates in
Social
Spain
Latin America
aspect
2006
2005
2004
--
--
2006
2005
2004
2006
2005
2004
--
--
--
--
--
--
83.05% 80.67%
79.26%
--
--
--
Ratio between basic
wages Female / Male(*)
Managers
--
--
--
--
Advanced Degree Holders 100%
100%
100%
85.16%
84.86% 85.53%
Basic Degree Holders 100%
100%
100%
88.64%
93.93% 89.85%
83.73% 85.70%
87.68%
--
--
--
Professionals
100%
100%
97.14% 105.26% 105.42%
85.89% 99.55%
95.98%
--
--
--
100%
(*) This information is provided for compliance with the LA 14 indicator published in the GRI Guidelines (Version 3).
The Group’s companies do not establish any differences in wages by sex when employees are hired.
The differences in wages in the subsidiaries and affiliates are due to the hiring, by professional category, of individuals with different expertise, profiles, etc., which
lead to different compensation upon hiring. Therefore, no aggregate figures are shown.
215
THE SUSTAINABILITY REPORT ACCORDING TO THE
AA1000 STANDARD AND THE GRI GUIDE
The primary reason for publishing IBERDROLA’s 2006
Sustainability Report is to disclose to all of the Company’s
stakeholders the results for fiscal year 2006 in terms of
the economic, environmental, and social aspects of the
Group’s activities.
IBERDROLA based this report on a variety of
recommendations, guidelines, and standards, in such a
way that the final results reflect, to the extent possible,
what various interested organizations expect from this
type of information. The sources considered to be the
most significant are the AA1000 Assurance Standard and
the Reporting Framework Sustainability Reporting
Guidelines published in the 2006 edition of the Global
Reporting Initiative (GRI).
Identification of the application of the principles of
the AA1000 Standard
By preparing this report in accordance with the principles of
the AA1000 Standard, IBERDROLA has sought to ensure the
quality and reliability of the information presented. The
methods used by the Company to implement these principles
are described below.
Relevance of the information
IBERDROLA has included in the 2006 Sustainability
Report such information as it considers necessary so that
the readers to whom it is addressed will understand the
Company’s activities and achievements, and so that, with
this knowledge, they can make the appropriate decisions
regarding their relationships with the Company.
To do so, the section entitled “IBERDROLA, A Company
that is Responsible” explains in detail the procedure that
was implemented in order to identify the information that
should be included in this report.
In this context, IBERDROLA’s Senior Management will
continue to lead the Company’s sustainable management,
and will move forward in the provision of information
associated with the achievement of the objectives
established within the framework of its sustainability
strategy and associated with the new action plans directly
linked to the Company’s strategic plan.
Comprehensive information coverage
The information provided by IBERDROLA in this report
refers to the Group’s companies, activities, and the
geographical areas in which the Company’s corporate
decision-making bodies have a managerial function, and to
activities that may be deemed relevant from an
216
economic, environmenta, or social viewpoint. For this
purpose, the exhibit entitled “Features of the Sustainability
Report” explains the extent of the information and the
conditions and limitations of the information submitted,
which IBERDROLA will enhance in future fiscal years
through improvements in the management and information
processes and tools.
In this sustainability report, IBERDROLA identifies the
relevant issues and, based on an analysis of the impacts of its
activities and their scope, offers the reader information about
its position as a company and about its performance.
IBERDROLA is working on the automation of its
information system with respect to social and
environmental data, in order to improve their consistency
for all of the information being considered. This system
will enable greater internal control of those aspects and
will improve the comparability and follow-up of strategic
objectives and responsibilities at the corporate level.
Responsiveness to stakeholders
After identifying the relevant elements and the boundaries
of the information, IBERDROLA developed an information
model that enables responses to be made in a manner that
properly addresses the interests of the diverse groups with
whom it deals, and to which IBERDROLA dedicates
sufficient resources to fulfill its duties:
• The Company’s website is a continuously updated tool.
With a Double-A accessibility level, the site
(www.iberdrola.com) offers current information about
the Company’s economic, environmental and social
growth.
• The annual corporate report gathers the diverse
aspects of the Company’s activities in the economic,
environmental, social, corporate governance, audit,
and monitoring areas. Depending on the principle
under analysis, this Sustainability Report is notable in
that, in order to provide relevant and complete
information, the guidelines recommended by the
Global Reporting Initiative (GRI) have been followed,
with the corresponding development of all of the
necessary policies and disclosures through the
respective indicators.
• Proper communication among the diverse strategic
plans that the Company is developing, with
information about new objectives and compliance
with the previously defined ones, in a such a way that
the general public has all of the elements it needs in
order to obtain a full and accurate picture of the
IBERDROLA Group’s performance.
THE SUSTAINABILITY REPORT ACCORDING TO THE AA1000
STANDARD AND THE GRI GUIDE
In future fiscal years, these stable communications channels will
make it possible to continue working toward the establishment
of key indicators that show how the Company’s strategic plan
responds to the different needs of its stakeholders.
Table of Contents according to the Global Reporting
Initiative (GRI)
IBERDROLA’s 2006 Sustainability Report was prepared with
the application of the standards contained in the Reporting
Framework Sustainability Reporting Guidelines, Version 3.0,
contained in the Global Reporting Initiative (GRI), as
approved in 2006.
For the economic and social performance indicators
recommended by GRI that require the use of a calculation
formula, the ones contained in the corresponding Technical
Protocols were used. The energy indicators follow the GRI’s
Energy Protocol as a reference. The water indicators were
prepared in accordance with an internal guide developed
from the GRI’s Water Protocol. And internal guidelines were
established for the biodiversity indicators, based on the
protected areas defined by the WCU.
The notes referred to in the Table of Contents are:
Note (1)
Among the different levels defined by the GRI,
IBERDROLA considers this report to have reached the
“A+ application level”, which corresponds to an expert
organization whose report also includes independent
external verification.
GRI application level
C
C+
B
B+
A
A+
Self declared
Third-party
checked
GRI confirmed
(e millions)
Spain
South America
Central America and
North America
Others
TOTAL
The recommended table of contents appears on the
following pages, with the GRI indicators listed by sections,
along with the place where IBERDROLA reports on them. If
in any case the information does not completely reflect what
was required, this is not because of a lack of transparency on
the Company’s part, but rather because the information in
question was not available when this report was prepared.
The information for fiscal year 2006 follows the models
used by IBERDROLA in previous years, so as to offer full
and accurate information about the economic,
environmental and social aspects of the Company’s
activities.
1,345
22
11,017
1,285
17
11,738
Total Cost*
2006
2005
8,030
9,040
711
614
1,233
16
9,991
1,185
23
10,862
*Includes payments to providers of capital (shareholders and third parties)
Note (2)
At the consolidated level, the subsidies received by the
IBERDROLA Group are reflected in the following table:
Capital subsidies
The above-mentioned GRI Guidelines recommend the
inclusion of an index for quick determination of the status
of the various GRI indicators in the documents making up
the Report.
Net Sales
2006
2005
8,719 9,707
932
729
2006
130.9
(e millions)
2005
93.2
These subsidies basically reflect the amounts received
pursuant to agreements with the public authorities for
electrification plans, improvements in the quality of
service, and the financing of fixed assets, by both public
authorities and third parties.
No separate information is available pursuant to the
requirements of the EC4 indicator in the GRI Guidelines.
Additional information is available in the document
entitled “2006 Legal Information”, in notes 4q and 20
regarding “Deferred income”.
Note (3)
Information about non-monetary sanctions is not
available.
Note (4)
Information available refers to the total amount of the
economic sanctions; broken down figures are not
available.
217
Global Reporting Initiative (GRI) Content Index
1.
STRATEGY AND ANALYSIS
1.1
Statement from the most senior decision maker of the organization about the
Sustainability Report 2006
(Page)
relevance of sustainability to the organization and its strategy
5
1.2
Description of key impacts, risks, and opportunities
37, 107, 109, 111
2.
ORGANIZATIONAL PROFILE
2.1
Name of the organization
227
2.2
Primary brands, products, and/or services
13, 158
2.3
Operational structure of the organization, including main divisions,
2.4
2.5
operating companies, subsidiaries, and joint ventures
35
Location of organization's headquarters
13, 227
Number of countries in where the organization operates, and names of countries with
either major operations or that are specifically relevant to the
sustainability issues covered in the report
13
2.6
Nature of ownership and legal form
227
2.7
Markets served
13
2.8
Scale of the reporting organization
14, 15
• Number of employees
211
• Net sales
192
• Total capitalization
196
• Products or services provided (quantity)
18 - 20
• Total assets
193
• Beneficial ownership
27
• Revenues, by region
217 (Note 1)
• Costs, by region
217 (Note 1)
• Employees, by region
211
Significant changes during the reporting period
18, 27
• Size
18 - 20; 79; 199 - 202
• Capital structure
27
2.10
Awards received in the reporting period
103
3.
REPORT PARAMETERS
2.9
Report Profile
3.1
Reporting period for information provided
Year 2006
3.2
Date of most recent previous report
Year 2005
3.3
Reporting cycle
Annual
3.4
Contact point for questions regarding the report or its contents
137, 229
Report scope and boundary
3.5
Process for defining report content
98
3.6
Boundary of the report
189
3.7
Specific limitations on the scope or boundary of the report
189
3.8
Basis for reporting on joint ventures, subsidiaries, leased facilities,
outsourced operations, and other entities that can significantly affect
comparability from period to period and/or between organizations
218
114, 190
3.9
Data measurement techniques and the bases of calculations
3.10
Explanation of the effect of any re-statements of information provided
(Page)
in earlier reports, and the reasons for such re-statements
3.11
190, 191
191
Significant changes from previous reporting periods in the scope, boundary, or measurement
methods applied in the report
191
GRI content index
3.12
Table identifying the location of the standard Disclosures in the report
216 - 223
Verification
3.13
Policy and current practice with regard to seeking external assurance for the report
4.
GOVERNANCE, COMMITMENTS, AND ENGAGEMENT
191
Governance
4.1
Governance structure of the organization, including committees under the highest governing body
responsible for specific tasks, such as setting strategy or organizational oversight
28, 33
4.2
Indicate whether the Chair of the highest governance body is also an executive officer
28
4.3
Number of members of the highest governance body that are independent and/or non-executive members
28
4.4
Mechanisms for shareholders and employees to provide recommendations or direction to
the highest governance body
27, 150
4.5
Linkage between compensation for members of the highest governance body, señor managers, and
executives and the organization's performance
34, 35
4.6
Processes in place for the highest governance body to ensure conflicts of interest are avoided
32
4.7
Process for determining the qualifications and expertise of the members of the highest
governance body for guiding the organization's strategy on economic, environmental,
and social topics
4.8
to economic, environmental, and social performance and the status of their implementation
4.9
97
Procedures of the highest governance body for overseeing the organization's identification and
management of economic, environmental, and social performance
4.10
32
Internally developed statements of mission or values, codes of conduct, and principles relevant
33, 37
Processes for evaluating the highest governance body's own performance, particularly
with respect to economic, environmental, and social performance
33, 37
Commitments to external initiatives
4.11
Explanation of whether and how the precautionary approach or
107, 111, 120 - 122
principle is addressed by the organization
4.12
Externally developed economic, environmental, and social charters, principles, or other
initiatives to which the organization subscribes or endorses
4.13
98
Memberships in associations and/or national/international advocacy
organizations in which the organization participates
102
Stakeholders engagement
4.14
List of stakeholder groups engaged by the Organization
98
4.15
Basis for identification and selection of stakeholders with whom to engage
98, 137
4.16
Approaches to stakeholder engagement
98
4.17
Key topics and concerns that have been raised through stakeholder
engagement, and how the organization has responded to those key topics and concerns
100
219
5.
MANAGEMENT APPROACH AND PERFORMANCE INDICATORS
5.1
ECONOMIC
Disclosure on Economic Management Approach
(Page)
41
Economic Performance Indicators
Economic performance
EC1
EC2
Direct economic value generated and distributed
198
Financial implications and other risks and opportunities for the
organization’s activities due to climate change
121
EC3
Coverage of the organization’s defined Benefit plan obligations
145
EC4
Significant financial assistance received from government
217 (Note 2)
Market presence
EC5
Range of ratios of standard entry level wage compared to
local minimum wage at significant locations of operation
EC6
suppliers at significant locations of operation
EC7
149, 214
Policy, practices, and proportion of spending on locally-based
166
Procedures for local hiring and proportion of senior management hired
from the local community at locations of significant operation
144
Indirect economic impacts
EC8
Development and impact of infrastructure investments and services provided primarily for
public benefit through commercial, in-kind, or pro bono engagement
104
EC9
Understanding and describing of significant indirect economic impacts
104
5.2
ENVIRONMENTAL
Disclosure on Environmental Management Approach
107 - 112
Environmental Performance Indicators
Materials
EN1
Materials used by weight or volume
117, 118, 130
EN2
Percentage of materials used that are recycled input materials
133, 136
Energy
EN3
Direct energy consumption by primary energy source
116 a 119
EN4
Indirect energy consumption by primary source
119, 155
EN5
Energy saved due to conservation and efficiency improvements
115, 119, 135
EN6
Initiatives to provide energy-efficient or renewable energy based products and services,
EN7
and reductions in energy requirements as a result of these initiatives
135, 136
Initiatives to reduce indirect energy consumption and reductions achieved
135, 136
Total water withdrawal by source
131, 132
Water
EN8
Biodiversidad
EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas
and areas of high biodiversity value outside protected areas
126 - 130
EN12 Description of significant impacts of activities, products, and services on biodiversity in
protected areas and areas of high biodiversity value outside protected areas
220
126 - 130
EN14 Strategies, current actions, and future plans for managing impacts on biodiversity
(Page)
126
Emissions, effluents, and waste
EN16 Total direct and indirect greenhouse gas emissions by weight
116, 117, 121, 122
EN17 Other relevant indirect greenhouse gas emissions by weight
123
EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved
121 - 123
EN19 Emissions of ozone-depleting substances by weight
125
EN20 NO, SO, and other significant air emissions by type and weight
123 - 125
EN21 Total water discharge by quality and destination
131 - 133
EN22 Total weight of waste by type and disposal method
133 - 135
EN23 Total number and volume of significant spills
133
Products and services
EN26 Initiatives to mitigate environmental impacts of products and
services, and extent of impact mitigation
EN27 Percentage of products sold and their packaging materials that are reclaimed by category
135
136
Compliance
EN28 Monetary value of significant fines and total number of non-monetary sanctions for
non-compliance with environmental laws and regulations
136
Transport
EN29 Significant environmental impacts of transporting products and other goods and materials
used for the organization’s operations, and transporting members of the workforce
123
Overall
EN30 Total environmental protection expenditures and investments by type
5.3
137
SOCIAL PERFORMANCE
Disclosure on Management Approach on labor practices and decent work
139 a 143
Labor practices and decent work performance indicators
Employment
LA1
Total workforce by employment type, employment contract, and region
143, 144, 211
LA2
Total number and rate of employee turnover by age group, gender, and region
143, 144, 212
LA3
Benefits provided to full-time employees that are not provided to
temporary or part-time employees, by major operations
144, 145
Labor/management relations
LA4
Percentage of employees covered by collective bargaining agreements
145, 212
LA5
Minimum notice period(s) regarding operational changes
145, 146
Occupational Health and safety
LA6
Percentage of total workforce represented informal joint management–worker health and
safety committees that help monitor and advise on occupational health and safety programs
LA7
Rates of injury, occupational diseases, lost days, and absenteeism,
and number of work-related fatalities by region
LA8
LA9
147, 213
213
Education, training, counseling, prevention, and risk-control programs in place to assist
workforce members, their families, or community members regarding serious diseases
148
Health and safety topics covered in formal agreements with trade unions
146
221
(Page)
Training and education
LA10 Average hours of training per year per employee by employee category
148, 214
LA11 Programs for skills management and lifelong learning that support the continued
employability of employees and assist them in managing career endings
LA12 Percentage of employees receiving regular performance and career development reviews
149, 214
149, 215
Diversity and equal opportunity
LA13 Composition of governance bodies and breakdown of employees per category according
to gender, age group, minority group membership, and other indicators of diversity
215
LA14 Ratio of basic salary of men to women by employee category
149, 215
Disclosure on Management Approach on Human Rights
139 a 143, 149, 150, 163 a 165
Human Rights Performance Indicators
Investment and procurement practices
HR1
Percentage and total number of significant investment agreements that include
human rights clauses or that have undergone human rights screening
HR2
104, 105
Percentage of significant suppliers and contractors that have undergone screening
on human rights and actions taken
163 - 166
Non discrimination
HR4
Total number of incidents of discrimination and actions taken
150
Freedom of association and collective bargaining
HR5
Operations identified in which the right to exercise freedom of association and collective
bargaining may be at significant risk, and actions taken to support these rights
139 - 143, 149, 150
Child labor
HR6
Operations identified as having significant risk for incidents of child labor,
and measures taken to contribute to the elimination of child labor
139 - 143, 149, 150
Forced and compulsory labor
HR7
Operations identified as having significant risk for incidents of forced or compulsory labor,
and measures to contribute to the elimination of forced or compulsory labor
Disclosure on Management Approach on Society
139 - 143, 149, 150
155, 156, 169
Society Performance Indicators
Community
SO1
Nature, scope, and effectiveness of any programs and practices that assess
and manage the impacts of operations on communities
105
Corruption
222
SO2
Percentage and total number of business units analyzed for risks related to corruption
157
SO3
Percentage of employees trained in organization’s anti-corruption policies and procedures
157
SO4
Actions taken in response to incidents of corruption
157
STANDARD AND THE GRI GUIDEGRI GUIDE
(Page)
Public policy
SO5
SO6
Public policy positions and participation in public policy development and lobbying
156
Total value of financial and in-kind contributions to political parties,
politicians, and related institutions by country
157
Anti-competitive behavior
SO7
Total number of legal actions for anticompetitive behavior, anti-trust,
and monopoly practices and their outcomes
157
Compliance
SO8
Monetary value of significant fines and total number of non-monetary
sanctions for non compliance with laws and regulations
Disclosure on Management Approach on Product Responsability
158 (Note 3)
158 - 163
Product Responsibility Performance Indicators
Customer health and safety
PR1
Life cycle stages in which health and safety impacts of products and services
are assessed for improvement, and percentage of significant products and services
categories subject to such procedures
PR2
159
Total number of incidents of non-compliance with regulations and voluntary
codes concerning health and safety impacts of products and services during their
life cycle, by type of outcomes
159
Product and service labeling
PR3
Type of product and service information required by procedures, and percentage
of significant products and services subject to such information requirements
160
PR4 Total number of incidents of non-compliance with regulations and voluntary
PR5
codes concerning product and service information and labeling, by type of outcomes
160
Practices related to customer satisfaction
160, 161
Marketing communications
PR6
Programs for adherence to laws, standards, and voluntary codes
related to marketing communications
PR7
161, 162
Total number of incidents of non-compliance with regulations
and voluntary codes concerning marketing communications
162
Privacidad del cliente
PR8
Número total de reclamaciones debidamente fundamentadas en relación con el respeto a la
privacidad y la fuga de datos personales de clientes
163
Customer privacy
PR9
Monetary value of significant fines for non-compliance with laws and regulations
concerning the provision and use of products and services
158 (Note 4)
223
CERTIFICATE OF EXTERNAL VERIFICATION
KPMG Asesores S.L.
Edificio Torre Europa
Paseo de la Castellana, 95
28046 Madrid
KPMG Asesores S.L. firma española miembro de
KPMG Internacional, sociedad suiza
224
Reg. Mer Madrid, T. 14.972, F.53,
Sec. 8, H.M-249.480, Inscrip. 1.ª
C.I.F. B-82498650
INDEPENDENT EXTERNAL VERIFICATION REPORT
225
226
IDENTIFICATION
IBERDROLA, S.A. was incorporated for an indefinite period of time via a public instrument executed on July 19, 1901
before the Bilbao Notary Public Mr. Isidro de Erquiaga y Barberías and registered in book 17 of the Companies
Section, folio 114, sheet 901, entry no.1 in the Biscay Commercial Registry. The Company's Tax Identification
Number is A-48010615.
The Company's By-Laws were adapted to the Consolidated Text of the Spanish Companies Law by virtue of the
resolution adopted by the shareholders at the General Shareholders' Meeting held on June 16, 1990 and formalized
in a public instrument executed on July 6, 1990 before the Bilbao Notary Public Mr. José María Arriola Arana under
number 2080 of his notarial register and recorded with the Biscay Commercial Registry in volume 2110, folio 56,
sheet BI-167-A, entry no. 700.
Its present name was adopted by the shareholders at the General Shareholders' Meeting held on November 1, 1992
and formalized in an instrument executed on December 12, 1992 before the Bilbao Notary Public Mr. José María
Arriola Arana under number 4150 of his notarial register and recorded with the Biscay Commercial Registry in
volume BI-223 of the General Companies Section, folio 156, sheet BI-167-A, entry no. 923.
By means of a resolution adopted by the shareholders at the General Shareholders' Meeting held on April 1, 2000,
the Company's corporate purpose was adapted to meet the provisions of Spanish Electricity Industry Law 54/1997,
of November 27, which provided for the separation of regulated and non-regulated activities.
By means of a resolution adopted by the shareholders at the General Shareholders' Meeting held on April 3, 2004,
the current By-Laws have been adapted to the Transparency Law and to Corporate Governance best practices, which
resolution was converted into a public instrument on such date before the Bilbao Notary Public Mr. José María
Arriola Arana, recorded in his notarial register under number 558, and recorded with the Biscay Commercial Registry
in volume 4040, folio 122, page number BI-167-A, entry no. 1657.
The Company's registered offices are in Bilbao, at calle Cardenal Gardoqui, 8, where documentation relating to the
information contained in this Annual Report, together with all other public information on the Company, is
available to the shareholders.
227
228
ADDRESSES AND TELEPHONE NUMBERS FOR IBERDROLA
SPAIN
Corporate Headquarters
Cardenal Gardoqui, 8.
48008 BILBAO
Tel.: +34 944 151 411
Fax: +34 944 154 579
Edificio Iberdrola Madrid
Tomás Redondo, 1.
28033 MADRID
Tel.: +34 915 776 500
Fax: +34 917 842 110
Avda. Burgos, 8 B Edif. Génesis.
28036 MADRID
Tel.: +34 913 83 31 80
Fax: +34 917 67 53 89
Iberdrola Inmobiliaria
Alcalá, 265.
28027 MADRID
Tel.: +34 902 33 44 12
Fax: +34 902 33 44 11
Regional Offices:
Autonomous Community of Andalucía
Inca Garcilaso, s/n
Edificio Expo. Isla de la Cartuja 41092 SEVILLA
Tel.: +34 954 467 940 / Fax: +34 954 467 947
Principality of Asturias
Sabino Alonso Fueyo, s/n 33930 LANGREO
Tel.: +34 985 694 011 / Fax: +34 985 683 038
Autonomous Community of Canarias
San Clemente, 24 38002 SANTA CRUZ DE TENERIFE
Tel. móvil: +34 680 64 22 60
Autonomous Community of Castilla y León
Veinte de Febrero, 8 47001 VALLADOLID
Tel.: +34 983 352 400 / Fax: +34 983 453 125
Autonomous Community of Castilla-La
Mancha
Berna, 1 45005 TOLEDO
Tel.: +34 925 229 801 / Fax: +34 925 256 338
Autonomous Community of Catalonia
Marina, 18-18 Torre Mapfre, planta 39
08005 BARCELONA
Tel.: +34 932 218 390 / Fax: +34 932 218 391
Autonomous Community of Extremadura
Periodista Sánchez Asensio, 1 10002 CÁCERES
Tel.: +34 927 226 304 / Fax: +34 927 247 054
Autonomous Community of Galicia
Parque Empresarial Novo Milladoiro
Oliveira, 96 15895 Ames LA CORUÑA
Tel.: +34 981 535 920 / Fax: +34 981 535 930
Autonomous Community of Madrid
Chulapos, s/n 28005 MADRID
Tel.: +34 915 776 500 / Fax: +34 915 575 682
Autonomous Community of Murcia
Avenida de los Pinos, 7 30009 MURCIA
Tel.: +34 968 285 200 / Fax: +34 968 395 759
Autonomous Community of Navarra
Polígono Landaben. Calle C, Portal-E bajo
31012 Pamplona NAVARRA
Tel.: +34 948 220 017/Fax: +34 948 220 116
Autonomous Community of the Basque
Country
Avenida San Adrián, 48 48003 BILBAO
Tel.: +34 944 151 411 / Fax: +34 944 683 126
Autonomous Community of La Rioja
Carretera Laguardia, 91-93
Central Las Norias 26006 LOGROÑO
Tel.: +34 941 223 304 / Fax: +34 941 206 988
Autonomous Community of Valenciana
Edificio Aqua
Menorca, 19 Planta 13 46023 VALENCIA
Tel.: +34 963 510 722 / Fax: +34 963 885 117
France
Bâtiment Athea
9, Rue Kerautret Botmel. 35000 RENNES
Tel.: +33 299 50 10 37/Fax: +33 299 51 92 07
92, Rue de Courcelles F - 75008 PARÍS
Tel.: +33 1 47 04 86 74/Fax: +33 1 47 04 07 13
Greece
Kifissias Avenue 9, Office 506
15125 Maroussi. Athens GREECE
Tel.:+302 108 764 746
Italy
Via Gracchi, 151. 00192 ROMA
Tel.: +39 06 328 03 435 / Fax: +39 06 322 68 27
Latvia
IBERDROLA Ingeniería y Construcción Filiale Latvija
Tec-2 (Rekonstruksijas Buvlaukums)
Acone, Salaspils Novads. lv-2119 LATVIJA
Tel.: +37 772 27 00
Poland
Al. Niepodleglos´ci, 69 02-626 WARSZAWA
Tel.: +48 22 322 72 00 / Fax: +48 22 322 76 64
Portugal
Edifício Tivolí Forum. Avenida da Liberdade,
180-A, 7ª planta. 1250-146 LISBOA
Tel.: +351 21 350 2750 / Fax: +351 21 350 2775
United Kingdom
Wellington House, Starley Way
Solihull - West Midlands, B37 7HE ENGLAND
Tel.: +44 121 781 7345 / Fax: +44 121 781 7298
Russia
World Trade Centre
12 Krasnopresnenskaya, Nab. 12
123610 MOSCÚ
Tel.: +7 495 25 81 967
Switzerland
Zweigniederlassung Zürich
Löwenstrasse, 25. CH-8001 ZÜRICH
Tel.: +41 43 888 60 00 / Fax: +41 43 888 60 01
EUROPE
Albania
Rruga Qemal Stafa No 47. TIRANA
Tel.: +355 422 1220
Germany
Charlottenstrasse 63. D-10117 BERLÍN
Tel.: + 49 30 767673210/7330 / Fax: +49 621 423 6756
Belgium
Av. de la Renaissance, 12, 2º. 1000 BRUSELAS
Tel.: +32 2 740 19 19 / Fax: +32 2 740 19 20
Bulgaria
114 Vranya Str. 1309 SOFÍA
Tel.: +359 889 491 019
Slovakia
Horné Basty 12. 91701 Trnava SLOVAK REPUBLIC
Tel.: + 421 335 521 222
AMERICAS
North America
United States
201 King of Prussia Road. Suite 500
Radnor, PA 19087 PENNSYLVANIA
Tel.: +1 610 254 9783
Guatemala
6ª Avda. 8-14. Zona 1. 01001 GUATEMALA C.A.
Tel.: + 502 223 00 662 / Fax: +502 242 04 008
Mexico
Bulevar Manuel Águila Camacho, 24 - piso 19
Edificio Torre del Bosque
Colonia Lomas de Chapultepec
Delegación Miguel Hidalgo
11000 MÉXICO D.F.
Tel.: +52 55 85 034 600 / Fax: +52 55 85 034 605
Mexico (Continued)
Melchor Ocampo 193 Torre C Privanza
Piso 11 Despacho C - 11300 MÉXICO D.F.
Tel.: +52 55 9150 2100 / Fax: +52 55 9150 2101
South America
Bolivia
Avda. Illimani, 1973, Miraflores. LA PAZ
Tel.: +591 2 222 2200 / Fax: +591 2 222 3756
Brazil
Rúa Lauro Muller nº 116 - Salas 1101-1102
Botafogo Rio de Janeiro - 22-290-160
Tel.:+5521 3820 15 00 / Fax.: +5521 3820 15 03
ASIA
AFRICA
China
Nº1 Jian Guo Men World Trade Center Tower I
level 10 th. 100004 BEIJING
Qatar
Gulf Business Centre
P.O.Box 24305 Doha QATAR
Tel.: +974 438 38 04/Fax: +974 438 38 38
Kenya
Dhanjay Apartments, nº 807
Korocho Road. Valley Arcade P.O.Box 1493
Nairobi – 00606 KENIA
Tel.: 254 734 784 212
CUSTOMER SERVICE LINE
Tel.:+34 901 20 20 20
SHAREHOLDERS’ LINE
Tel.:+34 900 10 00 19
Chile
Avda. Vitacura, 2771, 5º piso - oficina 503
Las Condes. SANTIAGO DE CHILE
Tel.: + 562 236 57 17 / Fax: +562 236 55 58
Venezuela
Iberdrola Ingeniería y Construcción
Torre Poliprima, piso 06. Avda. Rómulo Gallegos
Urbanización Santa Eduvigis
Sucre. CARACAS
Tel.: +58 414 032 76 67/212 286 77 9
Tunisia
67, Rue Alain Savary
1082 Tunis TUNISIA
Tel.:+216 71 98 12 94/+216 71 74 69 39
IBERDROLA ON THE INTERNET
www.iberdrola.com
IBERDROLA’S e-mail
[email protected]
229
230
GIVE US YOUR OPINION
This 2006 Sustainability Report is available in electronic
format on IBERDROLA’s website: www.iberdrola.com
In order for us to know your opinion, you can send us
your comments and suggestions through the abovementioned website by filling out a survey that appears
under the report.
Thank you. We very much value your opinion.
www.iberdrola.com
231
RESERVATION OF RIGHTS
Publication: IBERDROLA
Design and Layout: IBERDROLA
Photography: IBERDROLA
Translation: Juriscribe
Printing: Elkar-mccgraphics
Legal Deposit: BI-755-07
This document provides a general, but not exhaustive, view of the principal
activities acrried out by IBERDROLA during 2006 in three dimensions of
sustainable development: economic, environmental, and social. Given the
geographic dispersion in which these activites take place and the diversity
thereof, completely involuntary errors or omissions may have occurred in this
Report, which will be rectified as soon as they become known. Any
modifications to the text of this document will be included in the version
hereof available in electronic format on the Internet at: www.iberdrola.com
Printed on eco-friencly recycled paper - Symbol Freelife Satin

1 BERDROLA a toda vela (1-37)

Transcription

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